''': ;¥n!i'."r';-' 




How to Save Money 



How to Save Money 

The Care of Money — Plain Facts About Every 
Kind of Investment — An Expose of the 
Prevalent Fraudulent and Get-Rich- 
Quick Schemes — Valuable and 
Authentic Information for 
all Moderate Money-Savers 
and Small Investors 



By 

Nathaniel C. Fowler, Jr. 

AUTHOR OF "STARTING IN LIFE," "PRACTICAL SALES- 
MANSHIP," ETC. 




CHICAGO 
C. McClurg & Co. 
1912 



Copjright 
A. C. McQurg & Co. 
1912 

Published February, 1912 



Entered at Stationers' Hall, 
London, Eingland. 



£aA305732 



PREFACE 

THE writer of this book feels that it is advis- 
able, although it may not be necessary, to 
announce positively that he is not connected, either 
directly or indirectly, with any form of invest- 
ment, or with any bank or brokerage establish- 
ment, or with any institution having anything to 
do with the sale of stocks, bonds, or securities of 
any kind. He has no axe to grind at the reader's 
expense, no scheme to further, and no investment 
to recommend. 

He is telling the truth, the whole truth, within 
the field of his light. He attempts to get at rock- 
bottom and to reach the sub-cellar of financial fact. 
He is aware that on all questions, and especially 
those of investment, opinions differ, and that most 
honest men cross swords when they attempt to 
appraise, value, and recommend. 

What one reliable man considers a good form 
of investment, may not appeal to the judgment of 
another equally honest and cautious. He who has 
been successful in investing along a certain line 
will naturally favor that form of investment, while 
another, who thinks that he has been bitten, con- 
demns a good thing, even though his injury may 
[v] 



Preface 

not have been caused by the unreliability of the 
investment itself. 

No one is completely fair, and every one is 
somewhat biassed. Personal experience, natural 
or acquired conceit, pig-headedness or stubborn- 
ness, count mightily in framing opinion and in 
forming judgment. 

All kinds of investments have some intrinsic 
value, save those which are highly fraudulent, but 
some give the maximum of security, while others 
have the minimum of it. Some are sound and 
solid, while others are purely speculative. 

The saver and investor should bear always in 
mind this great fundamental point, — that the 
maximum of interest is usually accompanied with 
the minimum of security, and that the minimum 
of interest is likely to be close to the maximum of 
safety. 

Good security seldom gives large profits. 

The writer has strenuously avoided the exercise 
of mere personal opinion, and has made every 
effort to keep far away from individual bias. He 
has used every known precaution, and he hopes 
that he has succeeded. 

To the little he knows, he has added the much 

of what he knows about what others know, and 

what he has written does not in any case represent 

his own unsupported opinion. He has dealt in 

[vi] 



Preface 

majorities, and has been a strict adherent to the 
great law of averages, that everything that he 
has said may have the strength of the composite. 
The book is not intended for large investors, or 
for professional money-changers, or for specula- 
tors. It is addressed, primarily, to men and 
women of every age who are financially able to 
save moderately and systematically, and who wish 
to learn, therefore, of every form of investment, 
that they may place their money with the max- 
imum of safety. 



fvu] 



CONTENTS 



CHAPTER PAGE 

I .The Mateeiamstic .... 13 
II The Provident and Improvi- 
dent 19 

III Living Beyond Our Means . 29 

IV Fixed Expenses 37 

V How Much to Save ... 39 

VI Extravagance 53 

VII Petty Extravagances ... 68 

VIII Dress 79 

IX Taking Advice 83 

X Loaning to Friends ... 90 
XI Taking Speculative Chances 96 
XII The Savings Bank .... 99 
XIII The United States Govern- 
ment Bond 113 

XrV The State, Municipal, and 

Town Bond 118 

XV Bank Stock 127 

XVI The Investment Value of 

Stocks 131 

[ix] 



Contents 

CHAPTER PAGE 

XVII Speculating ix Stocks . . 137 

XVIII Buying Stocks on Margin . 146 

XIX Industrial Stock .... 155 

XX The Real Estate Mortgage 168 

XXI The Chattel Mortgage . . 183 

XXII The Fake Investment . . . 185 

XXIII Owning a Home 210 

XXIV Life Insurance 224 

XXV Fire Insurance 238 

XXVI Accident Insurance . . . 242 

XXVII The Annuity 244 

XXVIII Backing Business .... 247 

XXIX Keeping a Bank Account . 252 

XXX The Cooperative Bank . . 259 

XXXI The Home Bank 262 

XXXII Keeping Accounts . . c c 264 

XXXIII Treating 269 

XXXIV The Safe Deposit Box . . 272 
XXXV What Some Terms Stand For 274 

Index 285 



t^] 



How to Save Money 



How To Save Money 



CHAPTER I 

THE MATERIALISTIC 

THE critical readers of this book, — and I hope 
there will be many of them, — may honestly 
feel that I have leaned altogether too heavily 
toward the purely materialistic at a sacrifice of 
the mental and spiritual and that which counts 
more in the up-lifting and betterment of humanity. 

Money, together with those things for which 
money stands, is largely located within the phys- 
ical or materialistic field; for money, by itself, 
is certainly of neither ethical, mental, nor spiritual 
composition, and is, as much as anything else, 
representative of the material. 

I do not apologize, however, for the policy of 
this book. The material plays by no means a 
secondary part on the stage of everyday life. If 
God found it necessary in creating the mental and 
spiritual man to build material headquarters for 
the housing of the mind and the soul, we have no 
right to ignore either of the departments of 
Divine construction. 

It is unnecessary to make a comparison between 
[13] 



How to Save Money 

the higher things and the lower things in which 
the higher things are kept. One without the other 
would not present, in this world, a completed 
whole. Therefore, as both are found together, 
one may be considered as essential to human life 
as the other. 

This world, preeminently material in its con- 
struction, should be considered and appreciated. 
It is, for the time being, the physical dwelling- 
place of the spiritual man. The Almighty placed 
us here for a purpose, and would not have given 
us physical land, and food, and other things as 
material, if they were not to be used by us and 
made to serve their ordained purposes. 

There will be neither money nor business in 
millennial days, for all things worth having will 
then be used, not abused. But for the present, 
and probably for many generations to come, money 
will play a prominent part, and the making and 
saving of money will be necessary for present 
existence and future protection. 

To ignore money and money-saving, because 
they may be purely materialistic, so long as they 
are necessary to human existence, is foolish and 
criminally wrong. 

It is impossible properly to develop and main- 
tain the better part of man without careful 
housing. Food, a roof, and fire will be essential 
[14] 



The Materialistic 

so long as we must eat and keep dry and warm. 
And these things, which some think are man's 
natural heritage, at the present time are procur- 
able only by the expenditure of money. 

Despise money if you will, and certainly it 
deserves to be despised, for, in itself, it is the 
cause of nearly every crime; but do not forsake 
money which is obtained honestly and may be 
profitably used. Unless we return to Nature, as, 
perhaps. Nature intended, we will have to get 
money or starve to death. 

A vessel, freighted with the necessities of life 
and many of those things which appeal to our 
higher nature, was stranded on an unknown island. 
A storm had made her unseaworthy, but her hull 
held together long enough for her cargo to be 
brought ashore. Everything was saved, including 
cases of beautiful paintings and other works of 
art, and books that live and talk. The captain 
was a man of education, but he never could have 
handled his vessel, if he had not kept his feet on 
deck while he looked into the clouds. The disaster 
was no fault of his. Did he order the works of 
art to be first landed ? Certainly not. They came 
last, and before them, lumber, and stoves, and food. 
Under his direction houses were built, with roofs 
that did not leak. Stoves were set up, beds made, 
and the strongest building of all contained the 
[15] 




How to Save Money 

food supplies. A well was dug, everything neces- 
sary for the physical body was arranged for. 
Then, and not until then, the works of art were 
taken and placed upon the walls, to add a touch 
of beauty to the bareness of the material. The 
house, with a roof that did not leak, came first. 
The physical man was attended to before any 
effort was made to please the eye or aesthetic taste. 
The better things were ignored until there was a 
material place to keep them in. 

I told this story in a lecture once, and a man 
with a long coat, a high collar, and a white neck- 
tie arose from the audience. He took highly 
respectable exceptions to what I had said, for this 
kind of man is never strenuous in thought or 
action. He claimed that he would rather have the 
landscape than the land. He enlarged upon the 
ethical and reduced the material. 'When he had 
finished, I remarked that the man who loved the 
landscape more than the land found it necessary 
to stand on somebody else's land that he might 
see everybody's landscape, and this sort of a man 
is dishonest, because he is willing to view the free 
and beautiful things of life at the expense of the 
hard-working man who bought the land for the 
visionist to stand upon. 

I wanted to use the language of the street, and 
say that this landscape man was a " dead-beat," 
[16] 



The Materialistic 

who was willing to " beat " his way to a free 
landscape. 

So long as we live largely by the expenditure 
of money, either we earn that money ourselves, or 
we are paupers. Many a man, who keeps his eyes 
turned continuously toward the sky, has no respect 
for the workers who are laboring to keep him on 
earth. It is dishonest not to support ourselves 
and provide for the future, unless we are phys- 
ically and mentally unable to do so. 

I am not asking any man to accumulate large 
sums of money, for few high-grade men ever do. 
But I am attempting to show that money-earning 
and money-saving are positively essential under 
present conditions, and that the refusal to earn 
money or to save money, when it can be done, is 
criminally dishonest, as dishonest as it is to steal 
your neighbor's house or your neighbor's bank. 

If you are able to earn your living, and are 
able to save money, and do not, you are a volun- 
tary pauper, unworthy of the respect of man. 

When you refuse to do these things, you simply 
and deliberately say to the world that you are 
willing to live by the sweat of others' brows and 
by the work of others' hands. 

Look into the sky, if you will, love and rever- 
ence art, think more of the purity of real beauty 
than you do of the purely material, but first 
[17 1 



Hov: to Save Money 

build a house with a roof that does not leak. If 
yoa do not, the rain will wash over jour canvases, 
and the smi will warp your hi^er thou^ts. 

The material cannot be built upon the spiritual, 
but the spiritual lives and thrives upon the mate- 
rial 

Never forget the need of a house with a roof 
that does not leak. 



[18] 



The Provident and Improvident 



CHAPTER II 

THE PROVIDENT AND IMPROVIDENT 

BOTH the spendthrift and the miser are plain, 
simple, and ordinary fools of the most con- 
ventional sort. There is not even the flicker of a 
spark of originality, progress, or of anything else 
which stands for anything worth while, in their 
everyday folly. They do not deserve, and they 
never receive, the respect of anybody, not even 
of their own kind. 

The spendthrift, in the whirl of the world, 
never meets a friend; and the miser, in his seclu- 
sion, is too unsocial even to see the reflection of 
himself. 

The spendthrift over-pays for everything which 
he receives. It is impossible for him to obtain 
equitable return for the money he distributes. He 
sows, but never harvests. He works harder in the 
field of his folly than do the toilers of the soil. 

The miser is a storehouse with a hundred 
entrances and without an exit. He is a receiver, 
not a contributor. He and the spendthrift are 
menaces to society, and a court of sensible equity 
and common justice, if it could be established, 
would sentence both of them to hard and active 
[19] 



How to Save Money 

labor — to doing something which would be a con- 
tribution to general humanity. 

It has been said (but, of course, the statement 
cannot be substantiated by statistical fact) that 
more than half of the great middle class of peo- 
ple, especially Americans, are improvident, that 
they spend all that they earn, that half of them 
attempt to put out more than they take in, and 
that they live close to their incomes, or ahead of 
them, flush to-day and cramped to-morrow. 

Whether or not the proportion given is as large, 
I will not attempt to say, but that it is of con- 
siderable dimension would appear to be self- 
evident. 

Practically every physician will admit that he 
loses from twenty-five to forty per cent of his 
bills, especially from the middle class of people, 
and that the lower grade of patients are likely to 
be of more financial profit to him than are those 
who fly regularly for shelter under the protecting 
wing of conventional respectability. 

The retail grocer, and others who cater to fam- 
ily trade, and the credit-giving tailor, especially, 
are obliged to use the utmost caution if they would 
avoid continuous loss. 

The establishment of commercial agencies, credit 
associations, and trade-protecting orders of every 
kind, furnish prima facie evidence that a heavy 

rsoi 



The Provident and Improvident 

proportion of the people at large are both dis- 
honest and improvident. 

The reader may feel that I am pessimistic, and 
that I am looking upon the dark side of things. 
The pages of this book are intended to be printed 
mirrors of fact, reflecting actualities, true state- 
ments of conditions that are, not conditions as we 
would like to have them. I would suggest that 
the doubter interview the retail merchant, and 
others, including the house-renters and the sellers 
of those things which appeal to the alleged better 
class of society. He may then feel that I have 
leaned rather toward the optimistic than to the 
pessimistic view. 

Why do people live beyond their means, espe- 
cially those with incomes sufficient to provide all 
of the necessities and most of the comforts of life ? 
There is not, and cannot be, any good reason. 
At best, there is but a feeble excuse, — the exem- 
plification of that false, and yet common, idea 
possessed even by those who have some brains of 
fair quality, that, because the world is popularly 
supposed to judge by appearances, and to reckon 
us by the outward show we make of ourselves, and 
to honor the superficial side of life, we are justi- 
fied in appearing to be what we are not at an 
expense which we have no right to allow ourselves 
to assume. 

[211 



How to Save Money 

This false conception of things, coupled with 
the bad judgment accompanying it, is largely 
responsible for the present deplorable condition 
of society, although, of course, the real source 
lies in the lack of personal honor, a quality which 
is far from becoming universal. 

As a matter of fact this reason, or excuse, for 
living up to our incomes, or beyond them, is with- 
out tangible or locatable foundation, for the 
spendthrift, or the extravagant man, is an all- 
around loser and a criminal before the bar of 
humanity ; and, further, he receives no real recog- 
nition from those before whom he makes his dis- 
play, no, not even from his kind. 

The sinner, whether his wrong-doing be extrav- 
agance, or something not quite so bad, or worse, 
is a product of vulgarity and corruption, a back- 
biter, a gossiper, and a busy-body, who, from some 
normal or abnormal reason, has not what may be 
considered sense enough to observe in others the 
very sin he, himself, commits. Therefore, the 
spendthrift, or his extravagant associate, fails to 
obtain what he desires, — a position in society, a 
recognition of what he wants people to think he 
is. The only benefit that accrues to him, if it may 
be so called, is that he enjoys artificially some of 
the luxuries which his sensible neighbor is not 
willing to have unless he can afford them. He 
[22] 



The Provident and Improvident 

does not, as a spendthrift, or as a representative 
of extravagant living, obtain a single true friend, 
and he never receives any real admiration. 

The friend who loves us because he is allowed 
to help us spend our money, or benefits by the 
expenditure of that money, or who admires us 
because we have money, does not represent, in 
fact, even the shadow of the semblance of the 
stuff friendship is made of. Friends cannot be 
purchased by money, and dealers in friendship 
refuse to be money-changers. 

A show of extravagance never did anybody any 
good, and never will. True friendship occurs 
only in a reciprocating way, and depends wholly 
upon genuine character. The extravagant man 
receives absolutely nothing, except the ignoble 
satisfaction which the exercise of over-expenditure 
gives to one who will not, or does not, think. 

The improvident man is usually a chronic bor- 
rower. He lives upon what he earns, and upon 
what he can get without earning it. He may or 
may not intend to make good. If he can, with- 
out an effort, he is likely to do so. If he cannot, 
he thinks little about it. The little he has left of 
his conscience is kept in cold storage and melts 
in the sunlight. 

A large proportion of improvident people 
refuse to save when they have the opportunity, 
[23] 



How to Save Money 

They live beyond their means. They would not 
sacrifice any part of the present for the protec- 
tion of the future, and yet they expect the provi- 
dent to help them when disaster comes. 

Let me illustrate by a concrete example: Two 
young men of equal ability, but not of equal 
character, start to travel the great highway of 
life. For a dozen years their incomes are the 
same, and there should be no material difference 
in their expenses. One allows himself to enjoy 
the luxuries of life, and at the end of the period 
he is dollarless. The other has been provident, 
but not mean. He has lived below his income, and 
has accumulated some money. The improvident 
man, who has lived better and enjoyed the luxu- 
ries of life, expects the provident man, who has 
made sacrifices, to share his savings with him. In 
other words, the spendthrift who has spent his 
money, — eaten it and drunk it, — asks the man 
who has saved to give part of his savings to him. 
He has eaten the whole of his pie, and demands a 
part of the other fellow's pie. This condition is 
too prevalent to be a novelty. 

It is self-evident that we cannot have money 
and spend it at the same time. The ever-ready 
spender does not accumulate, while the systematic 
saver protects himself against the future. 

There would appear to be no reason why the 
[24] 



The Provident and Improvident 

provident man should share his hard-earned sav- 
ings with the improvident man, who could and 
would have been in the same position in which the 
provident man is, if he had exercised the same 
care and made the same sacrifices. 

The sinner cannot escape punishment, and 
withholding deserved penalties, unless there be 
sufficient counteracting repentance, is neither fair 
nor equitable. 

The improvident man deserves to suffer. Let 
him suffer. He has earned a penalty. Let him 
have it. Better that he suffer ten times over 
than that the careful man make an undue sacri- 
fice for the benefit of one who threw away what he 
had. 

I know that I am making strong statements, 
and that some of my readers may misunderstand 
me, and, perhaps, I am giving them some oppor- 
tunity to feel that I do not look upon charity as 
the greatest virtue of all virtues. Let me, right 
here, assure these readers that I think I have an 
appreciation of charity, and of what charity 
stands for. Without charity, and the love it 
represents, this world would be a desert without 
oasis, and across it would flow no stream of living 
water. Charity is the very warp and woof of all 
there is worth having. But charity, distributed 
promiscuously, and given as a reward for crime, 
[25] 



How to Save Money 

is really an abetter of crime, and does harm where 
it intended to do good. 

There are times when we should help the 
improvident man, on account of the innocent mem- 
bers of his family, who may be free from fault. 
To aid him as a part of the suffering family is 
often justifiable, but to help him, alone, when his 
present condition is due to his voluntary acts, is 
not charity at all, and is, at best, of no stronger 
stuff than the distilled essence of diluted and senti- 
mental philanthropy. 

The man who is financially embarrassed because 
of extravagance, and because he would not save 
when he could save, does not deserve financial 
assistance when the inevitable crash comes, and 
any attempt on the part of the provident man to 
relieve him financially, unless such relief benefits 
an innocent family, is not only foolish, but often 
criminally wrong. 

Do not misunderstand me. I am not referring 
to the man who is suffering because of the inevi- 
table, — from conditions which were beyond his 
control, — but to the spendthrift, the voluntarily 
improvident, he who has lived up to his income, 
or beyond it, when he had more than sufficient to 
take care of him, and who is now suffering from 
his own voluntary misdeeds. Such a man deserves 
no financial help until he has redeemed himself by 
[26] 



The Provident and Improvident 

the sweat of his brow and the strain of his muscle. 
He is not an object of charity or of philanthropy, 
and he who loves to help others had better turn 
the tide of his goodness into other channels, that 
he may aid the millions of those who are thrown 
overboard, and who did not sink voluntarily. 

There are enough good men, temporarily or 
permanently in disaster, to furnish all the mate- 
rial philanthropists need for the exercise of their 
generosity. 

To help the deserving is right. To aid the 
undeserving is wrong; yes, doubly wrong, because 
the undeserving deserves no help, and the helping 
of the undeserving robs the deserving of his due. 

Giving more than opportunity to those who are 
too lazy to grasp it, is to encourage carelessness, 
extravagance, and sin. 

Those who do their best are worthy of all praise 
and aid, but those who will not do their best 
should suffer the self-imposed penalty. You have 
no right to do for another what he did not do for 
himself, when he comes to you and wants you to 
do for him what he could have done for himself 
and would not do. 

I have no pity for the man who won't. I have 
every sympathy for the man who will. 

He who tries to do his best is a success, no 
matter what the result may be; but he who does 
[27] 



How to Save Money 

not try to do his best has no right to expect the 
man who did his best to share with him the prod- 
uct of his labor, judgment, and sacrifice. 

Help those who help themselves, or who try to 
help themselves, and refuse to aid those who with 
closed eyes have walked in the light, and who with 
open ears have refused to hear the warning thun- 
ders of danger. 



[28] 



Living Beyond Our Means 

CHAPTER III 

LIVING BEYOND OUR MEANS 

I DO not think that I am far away from the 
truth when I say that experience and observa- 
tion make me believe that about seventy-five per 
cent of city dwellers and that about twenty per 
cent of the inhabitants of country towns spend all 
that they earn, and that at least one-half of them 
have lived or are living beyond their means. 

Instead of conditions changing for the better, 
they appear to be going the other way. Prob- 
ably more people are to-day living beyond their 
means than there were yesterday, and there seems 
to be little inclination on their part to practise 
any sort of economy. Not only do they spend all 
they earn, but they anticipate their incomes or 
salaries, incurring indebtedness in advance of pos- 
sibility of payment. 

It is obvious that a family of small income, 
and with legitimate necessary expenses, cannot 
always do much better than break even, though it 
practise the most stringent economy; but it is a 
fact that the majority of people spend all that 
they make, or live beyond their incomes. 

The necessities of life, and most of those things 
[29] 



How to Save Money 

which are considered comforts, are not excessively 
expensive. Most of us can live comfortably on 
very much less money than is supposed to be 
necessary for right living. Foundation expenses 
are small, over-head excesses are large, and most 
of the latter contribute very little to anything 
worth while. 

Getting behind is usually due to extravagance 
or to an unwillingness to do without the unneces- 
sary. 

True, no sharp line can be drawn between the 
cost of comfort and the cost of extravagance, for 
what may appear to be an extravagance for one 
person may be a seeming necessity for another. 
But one who cares, and who honestly desires to 
succeed, will not find it difficult to discriminate, 
and will invariably recognize the difference 
between the necessary and the unnecessary. 

Fully one-half of the financial failures are due 
to pure and simple extravagance in the home and 
to expenditure of money for personal pleasures 
entirely removed from necessity. Many a man, 
who manages his business with anxious care, 
handles his personal expenses in the most extrav- 
agant and foolish way. 

Not only are home and personal expenses the 
cause of half of the business failures, but they are 
in many cases the prime source of home troubles, 

[sol 



Living Beyond Our Means 

leading to the breaking up of the home and cover- 
ing nearly every form of family unpleasantness. 

While money appears to be more a part of 
business than of home life, the foundation of 
economy, or of extravagance, or of sensible or 
senseless expenditure, is laid in the home. Here 
one first begins to save money or to do the reverse. 

The economical-home man or woman is usually 
economical in business. 

Home extravagance, particularly that of 
clothes, has its basis in a desire to make what the 
world foolishly calls a good appearance, — to 
decorate the outside without regard to the con- 
dition or the necessity. In fact, I think that to 
this almost insane desire to make a so-called good 
appearance is due most of our extravagance in 
dress, in furnishings, in decorations, and in the 
purchase of things more for show than for utility 
and comfort. Indeed, the display of extravagance 
is always superficial. We wish to appear well 
before our friends and neighbors, who we think 
would judge us superficially. As a matter of fact 
any undue attempt on our part to dress or live 
beyond our means works in a direction opposite 
to our intentions. We are not judged as super- 
ficially as we think we are. Most of us, partic- 
ularly if we are of the middle class, are pretty 
fairly well sized-up by our friends and acquaint- 
[31] 



How to Save Money 

ances. They either know what our income is, or 
can come pretty close to it. If we over-dress 
ourselves, they despise us, even though they may 
be as guilty as we are. 

If we cannot afford to keep horses or auto- 
mobiles, and we do so, we lose the respect of 
horse-keepers and automobilists, even though they 
may have less right than we have to drive horses 
or run motor-cars. 

The shoddy man has no respect for his kind. 
If he is shoddy, he recognizes the quality in all 
those who are shoddy. 

It is impossible to understand that peculiar 
trait in human nature, which encourages one to 
*' show off," so to speak, among those who know 
that one is " showing off." It would seem that 
nothing is to be gained by pretending to be what 
we are not to those who know that we are not 
what we pretend to be. For example, let us sup- 
pose that Mr. John Smith is Mr. John Jones's 
employer, and that Mrs. Smith invites Mrs. Jones 
to tea. Mrs. Smith knows the size of the Jones 
income; therefore, she is in a position to judge 
whether or not her guest is dressed properly and 
within her means. It is quite probable that the 
wife of the employee will wear better and more 
expensive clothes than those worn by the employ- 
er's wife. Instead of Mrs. Smith being im- 
[32] 



Living Beyond Our Means 

pressed by Mrs. Jones's clothing, she despises 
the woman for living beyond the family income, 
and carries her disgust to her husband, to the 
detriment of Mr. John Jones. 

May I forget honesty for a moment that I may 
more closely analyze pretence, which is the top, 
bottom, sides, and centre of the cause for living 
beyond our means? Let me consider pretence, for 
the time being, as a commodity with intrinsic 
value. If it be a commodity, and if it have 
intrinsic value, then it is valuable only in so far 
as it is not recognized as pretence, but is consid- 
ered as representative of fact. 

If one cares nothing for truth and honesty, 
then he may use pretence to some advantage, pro- 
vided always that he can mask it effectively, and 
can force it to appear what it is not. This, how- 
ever, is impossible for any one to accomplish. 

The pretender is always the loser, in the long 
run surely, in the short run usually. The cold- 
blooded world will weigh him correctly, sooner or 
later. 

There is absolutely nothing to be gained by 
living beyond one's means: First, because it 
prevents one from protecting oneself in case of 
emergency; Secondly, because it is a precarious 
habit and sets a bad example; Thirdly, because 
it necessitates economy In some directions, which 
[33] 



How to Save Money 

may be dangerous to health and comfort; 
Fourthly, because, instead of giving the credit 
and producing the impression desired, it always 
results in the opposite; Fifthly, because it is 
the forerunner of almost certain failure ; Sixthly, 
it is positively dishonest; Seventhly, because its 
action always injures and never accomplishes any- 
thing. 

We pre what we are, and we are taken usually 
for what we are, except for a transient period or 
by people whose respect is worth less than nothing. 
We have what others think we have, and any 
attempt on our part to produce the impression of 
possessing more than we really have, can give only 
a boomerang result. 

Living beyond one's means is not only wrong, 
but extremely foolish. Even the most extrav- 
agant and foolish have not a particle of respect 
for their own kind, and in their hearts they 
admire those who have sense enough to live within 
their incomes. 

One of the best places for the study of human 
nature, and for the weighing of values, is at the 
summer resort, especially at the summer hotel, 
not necessarily of the better grade, but of the 
highest price. Fully seven-eighths of the over- 
dressed men and women, and of those who come in 
automobiles, represent neither wealth nor social 
[34] 



Living Beyond Our Means 

position. The probabilities are that the plainer 
dressed people, even though they comprise but a 
small per cent of the guests, collectively have a 
dozen times more money and more than a dozen 
times higher social standing. 

I am aware, of course, that practically all of 
the multi-millionaires, and all of their families, 
are devotees to show and style and to the dis- 
play of every form of foolish and financially 
criminal extravagance. 

The tendency for show on the part of our 
wealthiest people is growing rapidly, because dis- 
play offers opportunity for competition, and few 
men would care for very large sums of money if 
great wealth did not give them the chance to 
vulgarly parade it. 

But we need not draw our lesson from these 
over-monied people. Although they seem to be 
numerous, they are in an almost microscopic 
minority. 

Most of us compete only with our class or with 
one just above us. Competition means expend- 
iture, either of energy or money, or of both. 
Competition has its right place in every depart- 
ment of human affairs; for, when considered 
properly, it may be an incentive, a pusher and 
puller, leading to better things; but when its 
action is devoted wholly to show purposes, and I 
[S3] 



How to Save Money 

am using the word " show " advisedly, it is a 
menace to good society, disgusting and danger- 
ous, and productive of the worst result. 

Those who live beyond their means, and by 
that I do not mean getting in debt where there is 
no help for it, are positively dishonest as well as 
supremely foolish. Nothing is to be gained. It 
means the stifling of conscience, the loss of respect, 
the annihilation of economy, the production and 
development of extravagance, and stands for the 
ruin of the home, and the breaking down of the 
business. It accomplishes absolutely nothing in 
the round-up. Its maintenance neither creates 
nor holds the impression desired. It gives no 
return for the expenditure. 

May I not paraphrase the old rule? It might 
truly read, 

" By their extravagance may we know that 
they are not what they seem to be ! " 



[36 



Ficved Expenses 

CHAPTER IV 

FIXED EXPENSES 

EVERYBODY, except the pauper, receives his 
material necessities, comforts, and luxuries 
by the expenditure of money. This money is 
expended either systematically or promiscuously. 
If the former it is known as a fixed expense, set- 
tled upon with premeditation and with an appre- 
ciation of financial responsibility. 

The successful man invariably lives and works 
under a fixed expense, allowing himself to expend 
for a year, or for any other period, approximately 
what he has laid aside or proportioned for the 
purpose. For example, he decides that be can 
afford to live at a cost of four thousand dollars a 
year, and he does not allow himself to exceed that 
amount for regular living expenses. If he has 
much money saved up, or an unexpected thousand 
dollars comes in, he may decide to purchase an 
automobile or to take a trip to Europe; but he 
does not consider either as a part of his fixed 
expenses. They are extras, and are allowed to 
occur only as extras and not as a part of the 
regular cost of living. In this way he knows where 
he stands, regulates his outgo to his income, 
[37] 



How to Save Money 

exceeding it only when conditions either demand 
or suggest an extra expenditure. 

This fixed-expense principle is carried into his 
business and into all his financial transactions. If 
he be extravagant, his extravagance is not allowed 
to be a part of what he considers the regular cost 
of living. 

It is the duty of every one, whether his income 
be ten dollars a week or ten thousand a month, to 
establish a fixed expense, a definite scale of expen- 
diture, and to keep within that no matter how 
much he may spend as extras, considering every 
dollar beyond the amount appropriated as not a 
part of living or necessary expense, but as a jus- 
tifiable, foolish, or criminal extravagance. Even 
the latter, bad as it is, is not so disastrous if it is 
prepared for and the responsibility of it realized. 
Financial failure is usually due, not to thought- 
out and premeditated action, but to thoughtless- 
ness and carelessness in expenditure, to hit-or-miss 
speculation, and to that prevalent and chronic 
disease known as taking chances. 

Men who think and care may do wrong, but 
men who do not care, never do right, especially in 
financial matters. 



[88] 



How Much to Save 

CHAPTER V 

HOW MUCH TO SAVE 

NOW much should a young man, a single man, 
a to-be-married man, a married man, a man 
of any age, or a corresponding girl or woman, 
put aside as a saving or investment fund each 
week, each month, or each year, or during any 
other selected period? 

To establish either a set or general rule for 
anybody, save oneself, would be unreasonable 
and unfair, and, really, I doubt if it could be 
done at all. 

It is obvious that the multi-millionaire, with an 
annual income of millions of dollars, more or less, 
can save ninety-nine per cent of his profits, and 
yet keep the wolf of poverty from getting any 
nearer to him than an adjoining street. It is 
self-evident that the family man, whose wages are 
but a few hundred dollars a year, cannot put 
aside more than a small percentage of his earn- 
ings, or not more than a microscopic part of them, 
if he would give himself and his family the com- 
mon and ordinary necessities of life, luxuries 
never to cross his threshold. 

No percentage rule, or any other rule, can be 
[S9] 



How to Save Money 

established with this inequality of income, and 
with the extreme variation of living expenses, 
and while men who deserve to succeed, succeed and 
fail, and undeserving men meet with the same 
fate. 

^Vhen we live as we should live (and that means 
close to Nature), when we become satisfied with 
legitimate comforts, and rightly abhor extremes 
in luxury and inexcusable extravagances, we may 
then establish a somewhat universal footing, and 
a standard of living, which will admit of the 
framing and keeping of some definite rule of 
saving. 

The condition of our present status of semi- 
civilization makes it easy for one man to put 
aside a large proportion of what he earns or 
otherwise receives, and utterly impossible for 
another, who works as hard or harder, and who is 
in every way as deserving or more so, to approach 
anywhere near him, proportionately, in the 
amount of his savings. 

Therefore, it would appear to be impossible to 
establish a law of saving, or to form any general 
rule of giving, and this condition will remain until 
the people at large become more advanced, and 
are mentally able to grasp and properly weigh 
true values, and become intelligent enough to give 
as much credit to the man who does what he can, 
[40] 



How Much to Save 

be it ever so little, as to the one who accumulates 
a dozen times more money, because it is more than 
a dozen times easier for him to do so. 

Many a dollar-saver makes a greater eifort to 
assemble and hold his single dollar, than does the 
hundred-dollar man, who finds saving as easy as 
spending. 

A more terrible commentary could not be made 
upon the mischievous quality and contemptible 
charity of our modern brand of adulterated jus- 
tice, than the placing of the name of the heaviest 
giver in quantity at the head of the subscription 
paper, and thereby measuring the generosity of 
man, even in the Church itself, by the amount he 
gives of his property, and not by what he gives 
of himself. 

The one rule of saving that can be established 
is, — that it is the duty of every one who can save, 
to save all he can, provided he does not sacrifice 
a greater duty by so doing. 

Perhaps I can make it a little plainer. It is 
one's duty to save all he can economically save, for 
there is such a thing as extravagance in saving. 
To save more than one should save is meanness ; 
to save less than one should save is criminal. True 
economy stands for the good of all concerned, and 
demands an appropriate saving, neither more nor 
less. It forbids parsimony, and is equally opposed 
[41] 



How to Save Money 

to any sort of extravagance, or to any accumula- 
tion of abnormal proportions. 

Few of us, unless we have experienced poverty, 
or have lived close to it, have any adequate under- 
standing or realization of the purchasing and 
sustaining power of the moderate income, or of a 
small sum of money, which will do, if permitted, 
much more than it is usually allowed to accom- 
plish, and is sufficient for systematic and con- 
tinuous saving. 

I do not apologize for venturing the assertion 
that the great middle class of people wastes a 
third of what it spends, taking people as they 
run; that is to say, that most folks would receive 
substantially the same amount of necessities, com- 
forts, and pleasures, if they paid out two-thirds 
of the money they now spend or otherwise dis- 
tribute, and saved the balance. 

No matter how extravagantly inclined we may 
be ; no matter how much we may love money, and 
the good and bad things money will give us, we 
cannot occupy more than one bed at a time, nor 
wear more than one suit of clothes at once, nor 
does good society demand that we carry many 
spare beds or own more than a few suits of 
clothes. The necessities of life consist of the 
fulfilment of but a few conditions : 

First, Something to eat. 
[42] 



How Much to Save 

Secondly, A place to live in. 

Thirdly, Proper clothes. 

Fourthly, Proper care when sick or disabled. 

Beyond these things, the physical body demands 
nothing, however much it may want something. 
The present and economic conditions, however, 
add a Fifthly, that of some provision for emer- 
gencies and the future; and the better part of us, 

— our minds, — requires a Sixthly, that of men- 
tal food, and opportunity to receive those things 
which stand for something beyond the physical, 
and which reach out to the betterment of mankind, 

— education, development, and enlightenment. 
Something to eat costs comparatively little, if 

we would confine ourselves to wholesome food, the 
kind of food worth eating. The costly table is 
maintained at the sacrifice not only of digestion 
and health, but money as well. 

A place to live in need not heavily tax one's 
income, except in cities where there seem to be 
compulsory extravagances, and many of the 
so-called compulsory extravagances can be 
avoided. 

Appropriate and comfortable clothes are essen- 
tial, but well-dressing does not demand half the 
expense that most people think it does. It is 
remarkable how the application of care and sense 
will reduce the size of the clothing bills. It has 
[48] 



How to Save Money 

been said that the rich spend less for clothes than 
does the average member of the middle class, who 
seems to be laboring under that popular and 
prevalent delusion that appearances, and extrav- 
agance with its accompanying cost, are necessary 
to social standing. I am inclined to take excep- 
tions to this view, because the average millionaire 
and his family are likely to be foolishly extrav- 
agant, and to care as much for vulgar show as does 
the society man of little money, who would appear 
wealthy. This devotion to appearances, often 
carried over the line of sanity, is responsible for 
ninety per cent of the inexcusable waste and tin- 
sel show of the world. But the man of money, 
who does not need to be a spendthrift, is often 
more addicted to show than are those who have 
the flimsy excuse for doing it, — that they may be 
reckoned to be more than they are. 

Over-dressing, and any other form of extrav- 
agance, injures rather than helps one's reputa- 
tion, for the over-dressed and showy man and 
woman are plain and simple fools, and sometimes 
I think they deserve pity more than condemna- 
tion. With extravagance aU about them and on 
them, they criticise freely, and invariably con- 
demn their neighbors for doing what they do 
themselves. 

Any attempt at over-dressing is not only wrong 
[44] 



How Much to Save 

in principle, but it is pure idiocy. It gives no 
prestige, no real satisfaction, either to the 
party himself or to those who see him. Its ben- 
efits, if there are any, are of purely imaginary 
growth. 

Extravagance in dress is more to be condemned 
than over-expenditure in any other direction, for 
it does no good to anybody in any way. There 
is no excuse for it. It is primarily responsible 
for improvidence. It places a mortgage on the 
future. It incurs an indebtedness which is seldom 
paid, for equity and right are sure to foreclose, 
and at a time when the debtor is least able to 
stand the strain. 

Saving is necessary, that the sick and disabled 
may be cared for. Sickness comes in the night, 
and accident is likely to occur at any time. The 
future is always with us, as well as beyond us. 
It bears a significance for the present equalled 
only by the present itself. 

The future is in the hands of the present, and is 
not likely to prosper unless the present provides 
for it. 

We must either meet the future or die, and we 
cannot meet it properly or economically unless 
we foresee its demands and prepare for it. 

In no other way can we provide for the future 
than by saving in the present, by putting aside 
[45] 



How to Save Money 

things which the future will require. To fail to 
do this, if we can do it, is to commit a sin against 
ourselves and against our neighbor. 

There is likely to be little over-expenditure 
along mental lines. True, the bookworm, who only 
crawls through life, is as big a fool as the man 
who lives in the fields of gold. Occasionally some 
one pays for education more than it is worth ; for 
the mind-filling craze, which breaks one's health, 
which over-works the brain, even if the doer did 
what he did from good motives, is one of the 
worst forms of extravagance. It is no better 
than the placing of good things in a storehouse 
incapable of taking care of them. 

This fighting one's way through college, to 
obtain an education at the cost of health, is to be 
deplored. One had better be strong and healthy, 
with a body vigorous enough to use an untrained 
mind, than attempt to work a brain-full of educa- 
tion, with a frame too weak to carry it. 

The good of all training is in its distribution, 
— in the use that is made of it, — and the re- 
ceiver of a college education, who is unable to 
distribute it, has wasted his time and money, and 
others' time, in the getting of his education. 

The first and best thing for a man to do is to 
locate his level, and ascertain what he can do and 
what he cannot do, to find out what he needs and 
[46] 



How Much to Save 

what he does not need, and then to adjust his 
rate of expenditure to it. It may or may not 
absorb his income, and it may or may not allow 
him to save; 

Any attempt to live beyond our means adds 
nothing to our reputation and takes much away 
from it, for the world, filled as it is with the 
superficial, is sure, sooner or later, to reckon us 
for what we are and to level us unmercifully to 
our proper plane before it gets through with us, 
or before we get through with it. 

It is our duty, first, to take care of ourselves 
to-day; and, secondly, to prepare for to-morrow. 
To carry out the second proposition does not 
mean a sacrifice of to-day's necessities, for the 
responsibilities of to-day must be met whether 
or not there be something left over for to-morrow. 
But when one has more than enough for present 
necessities, he is a criminal before every bar of 
justice, if he does not provide for to-morrow. 

Take care of to-day first, then take care of 
to-morrow, but do not forget that your prime 
duty is to provide for to-morrow after you have 
properly taken care of to-day. 

Not to save when one can save is a refusal to 

make a reasonable sacrifice for the sake of the 

future. It places a man in the criminal class and 

suggests the advisability of framing a law which 

[47 1 



How to Save Money 

will prescribe a punishment beyond the natural 
penalty always accompanying improvidence. 

He who will not save when he can save, and save 
all that he should save, not only robs himself and 
his family, if he has one, but deliberately, volun- 
tarily, and intentionally becomes a menace to so- 
ciety, a member of the chain gang of paupers, of 
those who must rely upon others or perish when 
disaster arrives. 

Considerably more than half of the married 
couples begin married life with a capital limited 
to the clothes they wear and sometimes they are 
deeply in debt; and yet they allow themselves to 
enter the most holy state given to man or woman 
without any preparation for the future, which 
they voluntarily leave entirely unprotected. 

Of course none of these improvident people are 
in love with their mates, for true love is cautious 
and reasonably intelligent, and refuses to take 
unnatural chances, and never fails to provide for 
a probable future. They mistake infatuation for 
love, and without thinking about it, they foster 
the idea that two may live for the price of one. 
Nothing can be more illogical, nor more carelessly 
founded upon the quicksands of folly. 

If I were permitted to make a few laws, I would 
formulate one prohibiting marriage until one or 



[48 



How Much to Save 

both of the contracting parties had saved suffi- 
cient money to pay reasonable expenses for a 
year. I know that I am shocking the sentimen- 
talists, particularly those who love to be shocked, 
and who prattle and talk about the love they have 
never felt and do not understand. 

The man who is not willing to save before mar- 
riage enough to maintain himself and his wife for 
a year has not sufficient energy and character 
to suggest that he is worthy to become a hus- 
band and father; nor is he in love with his wife, 
for love always protects, and love is never blind. 
Sentiment may be without eyes or near-sighted, 
but love does not have to wear spectacles. 

The man who will not make a sacrifice in or- 
der to properly protect a probable family mis- 
takes passion and selfishness for love, or else he 
is a fool; and the fool has no right to marry. 

It is easier to save money before one is mar- 
ried than it is to do so afterwards, because living 
expenses are less, or should be so. The man who 
will not save without the cooperation of his 
economical wife, and must be coerced into doing 
right, is an unsafe proposition, and ought to be 
relegated to an enforced bachelorhood. 

Premature marriages, occurring before proper 
provision is made for the future, are the cause 



49 



How to Save Money 

of millions of break-downs and down-falls, and 
are primarily responsible for family wrecks, and 
often for divorces and every kind of dissipation. 

It is the duty of every one to establish an 
economical policy, which will compel him to save 
the difference between his income and what is 
actually essential for living. For example, if a 
couple can live with a reasonable degree of com- 
fort on a thousand dollars a year, and their in- 
come is fifteen hundred dollars, then it is their 
duty to save five hundred dollars, and to continue 
this proportionate saving until they have ac- 
cumulated a fund which appears to be large enough 
to meet any condition likely to arise, including 
business failure and old age. To save up to this 
point is right and necessary. To accumulate be- 
yond it shows avariciousness, a low character, a 
contemptible and inexcusable lack of public spirit, 
and no respect for the common decencies of life. 

I am speaking harshly, because I feel that I am 
right, and I do not apologize to anybody. If I 
am wrong, then lay the blame at the door of my 
sincerity and to the long reviewing of experiences 
with thousands of pe«ple. 

Over-saving is as bad as under-saving, perhaps 
even worse, because there may be an apparent ex- 
cuse, although I doubt it, for not saving when one 



50] 



How Much to Save 

can save, while there is absolutely not even the 
faintest shadow of reason for over-accumulation. 

Under-saving robs the man and his family, and 
creates expense for the town. Over-saving de- 
bauches the community. 

No one has a right to save beyond a sum which 
will give ample provision for his future, unless he 
is accumulating for a specific and laudable pur- 
pose. It is his duty to continue to save until he 
has reached the point of protection. 

Many of us can save much more than we think 
that we can, not by eliminating the necessities of 
life, but by cutting corners, so to speak. 

If one has a desire to save, he will find many 
more opportunities to do so than he had at first 
thought existed. 

What we want to do, we generally do; many 
of our wants, however, are purely imaginary. 

A desire to save, and an appreciation of the 
value of protection, will invariably find a way of 
accomplishment, unless conditions absolutely for- 
bid. 

It is better to save a penny a day for the sake 
of principle, than not to save at all. There are 
few of us who cannot put away a cent a day, and 
if a cent is all that can be saved, save it syste- 
matically. 



How to Save Money 

If jou would command the respect of your em- 
ployer, the respect of your neighbor, and the re- 
spect of the world at large, save, and save 
persistently, and be known as a provident man. 
Not only will you receive self-satisfaction and pro- 
tection, but you will be better liked and be more 
respected by everybody, even by the superficial. 

The bad man is not respected or loved by those 
of his kind, and the extravagant man, the man 
who can and will not save, is not only a knave, 
but a consummate fool, and he is so considered 
by those above him, with him, and beneath him. 

The saver, who systematically puts aside even 
the smallest sum, creates by so doing a definite 
asset, which has a value beyond its intrinsic worth, 
for it helps to establish reputation and is the 
badge of character, integrity, and good sense. 

The very principle of saving, itself, irrespective 
of the amount saved, if one saves all he can, puts 
the saver into a higher class, and gives him a tan- 
gible something which helps him to live better in 
the present and which protects him in the future. 

Men who save are men of mark ; men who do not 
save are marked men. 



[52] 



Eootravagance 

CHAPTER VI 

EXTRAVAGANCE 

THERE Is not even a shadow of a semblance 
of excuse, right, and reason for any form 
or kind of extravagance. It works injury to 
everything it comes in contact with, has never ac- 
complished anything for the good of anybody, nor 
has it contributed the gentlest push to the slow- 
est propulsion of the slightest progress. 

Extravagance does not possess a single redeem- 
ing quality. It is bad in substance and in prin- 
ciple. It has no place in human affairs, except 
to injure and to demoralize. It gives no return 
to anybody save transient pleasure, or, rather, 
the imitation of it, which, like the over-drinking 
of wine, is more than counteracted by disastrous 
results. 

Meanness is not a part of extravagance. It has 
nothing in common with it. It is a sin in itself, 
and inexcusable; yet, bad as it is, it possesses but 
a small percentage of the evil contained in ex- 
travagance. 

The injury meanness does may be confined to 
itself, and to those who come in immediate contact 
with it, while extravagance is a public sin con- 
[53] 



How to Save Money 

fined to no narrow boundary and making always 
for general harm. 

Economy is as far removed from meanness, from 
extravagance, and from those things which both 
stand for, as sunshine is opposed to midnight 
darkness. 

Economy is one of the necessities and essentials 
of life. Without it permanent progress is impos- 
sible, and no work worth while can be accom- 
plished. 

Economy is the world's preservative. Without 
it everything is spoiled. 

Economy and saving are closely allied, because 
without the former the latter could not exist. 

Saving is the result of economy, although the 
principle of economy underlies saving. 

The practice of true economy results in proper 
accumulation, — not too large and not too little, 
for economy has no sympathy with the miser and 
no mercy for the spendthrift. 

The difference between success and failure may 
be found in the analysis of economy and extrav- 
agance. 

Progress itself is founded upon economy, even 
upon strict economy, because of the power it has 
over the character of the people. 

Hoarding is not economy. The miser is but a 
storehouse. He receives, but does not distribute. 
[54] 



Extravagance 

Economy In business, and in everything else, ac- 
cumulates that it may direct and meet the exi- 
gencies of famine. It does not obtain for the sake 
of keeping; it saves in the present that it may 
properly protect the future. 

The practice of economy is dae to an apprecia- 
tion of the necessity of self-preservation combined 
with the desire to progress properly and to build 
a suitable foundation. 

Nobody ever amounted to anything, either in 
business or out of business, in the professions, or 
in any other walk in life, from the framing of 
law to the making of shoes, unless he was a suc- 
cessful economist, as able to save as to spend. I 
am not referring wholly to financial saving, but 
to economy In the broadest sense; for one can be 
a sort of economist, and successful In a way. If 
he Is not able to make or to save money. Many a 
professlonalist lacks the ability to accumulate 
money. Money to him seems to be an unknown 
quantity, hard to get and easy to get rid of. He 
does not, or will not, save money; he may, 
however, be a success, because, while he Is de- 
ficient In financial acumen, he may be proficient in 
economy. He may systematically and persistently 
store himself full of some material, — some kind 
of useful knowledge, — and In this direction he 
may practise and maintain a true economy with 
[55] 



How to Save Money 

an absence of extravagance so far as conserving 
and distributing this mental commodity are con- 
cerned. If he did not do this, that is, practise 
economy along his line of action, he would amount 
to nothing. 

It is a fact that financial success or business 
accomplishment is utterly impossible without 
basic, systematic, and persistent saving, the con- 
tinuous practice of financial economy, without 
more than an occasional appearance of extrava- 
gance, until one has amassed a fortune. 

Extravagance in money matters, and in all else, 
particularly if continuous, invites failure, and the 
invitation is invariably accepted. 

True, many of our multi-millionaires are vul- 
garly extravagant. They are men of coarse and 
distorted ideas of right, decency, and propriety. 
Their homes are show-houses for the display of 
things not worth having. Their garages, stables, 
and gardens are dedicated to the god of appear- 
ances, and not to the comfort of the occupants or 
their neighbors. They overpay for everything 
they receive. Superficial people stare at them with 
eyes of envy, while the sense of the world is sorry 
for them, and is full of pity for the misguided 
magnates of wealth, who are no better than plain 
simpletons, fools, or idiots, mentally incapacitated 
to perform the proper functions of life, unable 
[56] 



Extravagance 

to assume any manly part, or else are inten- 
tional criminals before the bars of both God and 
man. 

But these rich people at one time practised 
economy, perhaps the strictest economy; for, if 
they had not done so, they could not have accumu- 
lated sufficient funds to permit them to join the 
ranks of financial degenerates. They were wise at 
the start, although the practice of their wisdom 
gave them greater opportunity to embrace super- 
lative foolishness. 

But let not the reader assume that early econ- 
omy is responsible for later extravagance. The 
practice of economy cannot be held responsible 
for its results, which may be bad or may be good, 
as we choose to make them. The best things of 
life, including economy and health, can be used to 
injure ourselves and others. 

While a professional man may attain some suc- 
cess without resorting to financial economy, while 
he may be able to get along without giving much 
attention to money, or to the saving of it, the 
business man is doomed to immediate failure, and 
may never hope to rise above the ranks of insuf- 
ficient accomplishment, unless he handles his busi- 
ness and personal affairs without extravagance, 
and systematically and continuously practises 
every form of legitimate economy. If he does not 
[57 1 



How to Save Money 

have the faculty or inclination to do this, he can- 
not meet with any degree of satisfying success. 

I am aware that it is extremely difficult at 
times for some people to save, but any one can 
avoid extravagance, if he will. 

A man of small income, with a large and grow- 
ing family, may find it well-nigh impossible to do 
more than make both ends meet; but, if the right 
kind of stuff is in him, whatever be his walk in life 
or his responsibilities, he has no excuse for not 
trying, for not making every effort to save, even 
though he may not save anything. 

The very determination to save, in itself, 
coupled with a willingness to make reasonable 
sacrifices to save, may lead to ultimate success. 

What we try to do we may not always do, but 
what we do not try to do we never do. 

The practice of the principle of saving, as much 
as the value of the amount actually put away, con- 
tributes to accomplishment, to safety, to protec- 
tion, and to probable success. 

Nothing impresses a business man more than 
the ability to save on the part of one who applies 
for employment. Instinctively the employer has 
confidence in a saving clerk, and is suspicious of 
the one who lives up to his means or beyond them. 
Even though the employer himself is extravagant, 

[58] 



Extravagance 

he invariably bitterly condemns the employee who 
copies his foolishness. 

Go into any store or office, and line up on one 
side of the room the men who save and who live 
properly, and on the other side those who accum- 
ulate nothing and who are extravagant, and you 
will have on one side a line of people of possible 
success, and on the other side a line of almost 
certain failure. 

Every captain of industry, every millionaire, 
and every prominent business man will tell you 
that the beginning of their fortune was founded 
upon their savings, and that the success they met 
with was due to the practice of legitimate econ- 
omy, and to an abhorrence of every kind of ex- 
travagance. When they made five dollars a week, 
they saved at least a small part of it, or they 
made a most strenuous effort to do so. 

Making an effort to do a thing is next to 
actually doing it. 

Every professional man or scientist will posi- 
tively assert that the beginning of his accomplish- 
ment was due to a willingness and an effort, not 
only to accumulate knowledge, but to properly 
preserve it, that it might be used when wanted, and 
none of these men were extravagant along the line 
of their education or work. They may not have 

[59] 



How to Save Money 

been fortunate in many directions, and may have 
had little idea of money, but within their labor- 
atories they practised true economy, and seldom 
tolerated any form of waste. 

Every failure in life, if forced to make affidavit 
on the witness stand, will freely acknowledge, and 
without qualification, that a lack of proper 
economy, with or without a superabundance of 
extravagance, was largely responsible for his 
downfall. 

Let me relate an incident, which came within 
my own personal experience. A hard-working 
boy began to save at the age of fourteen. He 
put away aU he could without sacrificing neces- 
sary comfort and health. When he was twenty-six 
he had saved a thousand dollars, was draw- 
ing a good salary, and was properly providing 
for his family. He would have put aside a larger 
sum had it not been for unavoidable expenses. 
He had never been extravagant. He was am- 
bitious to go into business for himself in a line 
which required considerable capital. His thou- 
sand dollars would have been but a drop in the 
bucket of financial necessity. Therefore, he could 
not hope to start in for himself, imless he could 
borrow money or obtain a partner with sufficient 
fimds. He was well aware that a partner supply- 
ing aU of the capital might be imwiUing to give 
[60] 



EtJctravagance 

him more than an insignificant interest in the 
business. Not by accident, or because he was 
lucky, he found a man with less experience and 
with more money than he had, who wanted to es- 
tablish himself in this line of trade. This man 
with some means and less experience was as anx- 
ious to find a person of experience as my young 
friend was to secure a capitalist. My friend with 
only a thousand dollars borrowed a large sum of 
his partner, and put all of it into the business, that 
they might be equal partners with equal capital. 
The thousand-dollar man was not really in debt, 
as debt is commonly considered. Nor did he liter- 
ally borrow the money wholly on his own responsi- 
bility, because all of it went into the business. Of 
course, he had to pay a fair rate of interest, but 
that, too, came out of the profits. True, my 
friend had ability, but the deal was carried through 
largely because he had saved a thousand dollars. 
Without that money he might have remained a 
clerk for many years or for a lifetime. This sum 
in itself amounted to little, but the fact that he 
had saved it with necessarily large expenses, and 
with little opportunity for accumulation, was 
prima facie evidence that he had in him the in- 
trinsic stuff which is a part of the very substance 
of business success. If he had not shown his 
capacity for saving, and for saving against ob- 
[61] 



How to Save Money 

stacles, if he had not been willing to make sacri- 
fices, his experience and ability would not have 
justified the connection. To-day, he is one of the 
successful men in his city. 

Let me relate another incident, which came also 
under my personal observation. An acquaintance 
of mine was a man of considerable ability, cool- 
headed and energetic. For many years he drev/ 
a handsome salary, and at no time was it neces- 
sary for his expenses to exceed half of his income. 
He and his wife lived at the most expensive hotels. 
He did not save. He was extravagant. Because 
his income permitted him to have the many things 
he wanted, he had them. At the age of sixty he 
found himself without money and without posi- 
tion. He became a burden to his friends, a finan- 
cial derelict drifting upon the sea of life. 

During the forty years of his active business 
life, when he was receiving more than an average 
income, he refused to make provision for the 
future. Before any court of common sense he 
would have been convicted of criminal extrav- 
agance. At sixty he was a broken man, and yet 
physically and mentally able to do active work. 

The position of treasurer in his company was 

vacant, but the directors discharged him, instead 

of appointing him to the position. In experience 

and ability he was able to fill the place. He was 

[62 1 



Extravagance 

popular, and he had been honest and reliable, and 
there was no black mark against his record. A 
friend of his at the directors' meeting suggested 
his name for the position, a place which paid 
twenty thousand dollars a year. Election seemed 
probable when the president remarked: 

" I am very fond of Mr. Blank. He has been 
a good man, and has been faithful to our inter- 
ests. He has more than ordinary capacity, and 
is able to fill almost any position; but I cannot 
and will not trust the financial management of 
this company in the hands of a man who does not 
know how to handle his own money, who has never 
saved a dollar, and who has practised every form 
of extravagance." 

The words of the president weighed a ton, and 
became the mill-stone around this man's neck, 
which carried him to the bottom. He went down 
as those have gone down before him, because he 
had nothing to support him save ability, expe- 
rience, and faithfulness, a foundation good in it- 
self, but which rests upon the sinking sands of 
business unless it is propped up by the stones of 
money; for money is a part of business, and those 
who cannot keep money, cannot keep business. 

Still another incident: A young man lost his 
position through no fault of his own. He had 
been receiving two thousand dollars a year, a 
[63] 



How to Save Money 

good salary for one of his age and experience. As 
he had saved nothing, because of extravagance, it 
was necessary for him to go to work or starve. 
Good positions are difficult to find, and a man has 
to wait a long time, frequently, before he can 
lucratively locate himself. This young man could 
not afford to wait; therefore, he was forced to 
take a subordinate position, and was obliged to 
work up from the bottom all over again. At the 
end of five years he was no better off than he had 
been five years before. If he had not been ex- 
travagant, but had saved a little money, which 
he could have done easily, he would have been able 
to wait for a better opportunity and would not 
have lost business caste. 

An extravagant man, who loses his position, 
and who has not saved anything, is at a tremen- 
dous disadvantage. He must get to work imme- 
diately, and is usually obliged to take what he 
can find. He cannot hold his position in the busi- 
ness world and wait for the right opportunity. 
His vulnerable parts are exposed. The world 
knows that he is out of a job, and because he is 
obliged to take an inferior one, it assumes that 
he lost his last position through his own fault. 
He goes down, because he has nothing to hold him 
up, and misses success. 

I think that I may say truly that success is due 
[64] 



Extravagance 

to distinct and willing sacrifices, to the doing away 
with every form of extravagance, to the systema- 
tic saving of money, to the gaining and preserva- 
tion of knowledge, and to integrity and honesty. 

Don't imagine, young man, or man of any 
age, that the possession of automobile or motor- 
boat gives you even the tiniest boost into any kind 
of society strong enough to stand the faintest 
zephyr of the gentlest breeze. Society worth 
while is built of stronger stuif than that repre- 
sented purely by the expenditure of money. And 
don't get into your head, or if you do, get it out 
with the greatest despatch, that your credit at 
the bank, at the grocer's and the market, or any- 
where else, has gone up a cent because of an au- 
tomobile or a motor-boat or anything else of that 
class. The chances are that your credit has gone 
down several dollars, especially at your bank. 
Fully sixty per cent of all purchasers of motors 
for land or water cannot afford the luxury, and 
one-half of this sixty per cent have either mort- 
gaged their real estate, if they had any, or made 
some other unjustifiable sacrifice, that they may 
travel in style. The names of a proportion, and 
perhaps a large one, of automobile riders are to 
be found in the mortgage department of the regis- 
try of deeds. 

The purchase of anything one cannot easily 
[65] 



Hoic to Save Money 

afford, if it is to be seen, as is an automobile or 
a motor-boat, works against the financial credit 
of the owner, and does not give him any reputa- 
tion except that of being extravagant. If he can 
enjoy what he cannot afford, well and good for 
him. If he can be happy in a motor-car which 
represents a mortgage on his house or the cash- 
ing of a life insurance policy to the lessening of 
the protection due himself and family, — again, 
I say, well and good for him. He is an undesir- 
able citizen, imfit to be a husband and father, un- 
trustworthy, unreliable, and unrespected. 

The smile of extravagance never was put on to 
stay. The day of reckoning is sure to dawn dark 
and stormy. There is only one result, and that 
is financial embarrassment with or without the 
wreck of prospects, reputation, and family. Every 
extravagance (everything is an extravagance if 
it cannot be afforded) has to be paid for, and if 
it is not paid for by money which can be spared, 
the settlement is made sooner or later, and usually 
sooner, at an expense which makes the usurer's 
interest seem small in comparison. 

I am not asking any one to give up all the com- 
forts of life, or to place himself on the rack of 
business, or to live continuously in a windowless 
laboratory of science, never to look up to the blue 
skv or down at the green grass, for everv one 
[66] 



Extravagance 

has a right to rest, comfort, light, and sunshine. 
These things all contribute to the spiritual up- 
building of man. But he who will not sacrifice 
extravagance and luxury for better things, will 
never realize any laudable ambition, assuming that 
such a man can have one. 

Every accomplishment is born in travail. 
Without pain nothing has ever been done. Sac- 
rifice accomplishes every attainment. The men 
on top are those who worked the hardest at the 
bottom. The most skilful wielder of the sword 
has successfully carried the gun. 

The practice of economy stands for success, al- 
though none of its practitioners may ever rise 
above the common level. 

The practice of extravagance leads to ultimate 
and certain failure. 

By economy we may succeed; by extravagance 
we surely fail. 



[67] 



How to Save Money 

CHAPTER VII 

PETTY EXTRAVAGANCES 

EVERY cent is worth a cent, and every dollar 
represents one hundred cents. 

Take care of the cents, and the dollars will take 
care of themselves. 

Half of the waste of the world is below the dol- 
lar mark. 

Many a man loses many dollars, a cent at a 
time. 

Small or petty extravagances, the promiscuous 
or careless spending of a few cents, lead up to 
losses of every size. 

One who does not keep an account, and enter 
every out-going cent, can have no conception of 
the leaks, which in time are large enough to flood 
him with disaster. 

A cent, or a nickel, or a dime, is small in itself, 
but large in the aggregate. 
f~ Most spendthrifts have some appreciation of 
large sums, and many of them do not throw away 
money in the bulk, but limit their extravagances 
to the constant expenditure of pennies, nickels, 
dimes, and dollars, yet fail to understand the rea- 
son why they are always short of money, and why 
they are never able to get ahead. 
[ 68 ] 



Petty Extravagances 

A careful scrutiny of the lives of successful men 
will discover that most of them were economical 
in small things, and weighed every cent. 

Practically all accumulations of money began 
with small savings, with an appreciation of the 
value of a cent. 

Of course, this may be carried too far, and is, 
perhaps, partly responsible for the meanness of 
men of wealth, who seem more willing to pay five 
thousand dollars for an automobile than to give 
five cents extra for a hair-cut. But, although 
this petty saving may be the foundation of con- 
tinuous closeness and meanness, without it suc- 
cess is impossible, and a competence can never be 
realized. 

There is a vast gulf between the miser and the 
careful saver. The former hoards for the sake 
of keeping the money, and the latter saves for the 
sake of principle, and for protection. 

The conscientious saver may even approach 
meanness, but better that than the opposite, for 
the mean man is seldom a public charge ; if he does 
nothing else, he is able to take care of himself. 

The strenuous life we are living, and the con- 
tinuous display, offer every opportunity for 
extravagance, and place temptation upon every 
corner. One must brace oneself against it or fall. 

There are a thousand petty extravagances, each 
[69] 



How to Save Money 

by itself amounting to little, but altogether pro- 
ducing a disastrous total. 

Take the soda water and pop beer fad, for ex- 
ample. There is not a hamlet large enough for 
a post-office, without one or more soft-drink coun- 
ters, which are responsible for a habit having much 
to do with the careless expenditure of nickels. 

In the first place, the drinking of soft drinks is 
precarious ; many of them are neither cooling nor 
healthful. Although they may not be injurious, 
they are usually over-sweetened, and may be im- 
pure. They do not quench the thirst, but, in- 
stead, stimulate the thirst for another drink. So 
far as I know, not one of them contains any 
medicinal or tonic property. Their value appears 
to be largely limited to the advertisements of them. 
Plain water is always procurable, and few of us 
drink half enough of it. Water is Nature's own 
and best thirst-quencher, and is usually free. 

Hundreds of thousands of young men and 
women average twenty cents a day for soft drinks 
during the summer. It is a fact that the majority 
of soda, root beer, and tonic drinkers are those 
who~ cannot afford the nickels, and it is also a fact 
that the majority of well-to-do people are not 
regular patrons of soft-drink bars. If you do not 
believe this, stand in front of a soda-water coun- 
ter and size up the drinkers. You will find that 
[70] 



Petty Extravagances 

most of them have small incomes, are clerks and 
shop-girls, and others to whom five cents is quite 
a sum of money. 

Bear in mind that I am talking of averages, not 
exceptions. Comparatively few of us are soft- 
drink abstainers, but the better class of us are not 
soft-drink drunkards. 

The next time you have your shoes shined by a 
professional boot-black, carefully observe the ap- 
pearance and probable financial condition of the 
patrons of the boot-black booth. A large propor- 
tion of them are shabbily dressed, and many of 
them wear shoes not worth a shine. True, many 
a well-to-do person is obliged to use the public 
blacking-stand, because no one is supposed to 
carry a box of shoe-blacking with him, or a polish- 
ing brush; but I am referring to the habitual 
patron, who deliberately leaves his home with his 
shoes unpolished and stops at the nearest black- 
ing booth. This he does every day at an expense 
of thirty-five cents a week. A box of the best 
shoe-polish costs ten cents, and there are, at least, 
fifty shines in a box. Fifty self-shines, then, cost 
ten cents, and fifty shoe-stand shines cost two dol- 
lars and fifty cents. Furthermore, a self-shine 
takes half of the time required for a boot-black 
shine, and time is, or should be, money. 

Then there is the shaving proposition. A first- 
[711 



How to Save Money 

class shave costs from ten to twenty cents, a self- 
shave costs less than a cent. The self-shaver can 
shave in half the time occupied by the barber. 

Figure it out for yourself, — one cent a shave, 
or seven cents a week, or, say, fifteen cents a shave 
or one dollar and five cents a week. It is a fact 
that comparatively few men of standing, char- 
acter, and intelligence patronize a barber, except 
for a hair-cut. Most of these men are self- 
shavers, and many of them, who can afford to pa- 
tronize the barber-shop, shave themselves because 
of the amount saved and the cleanliness of the 
operation. Very few cannot shave themselves, 
even if they think that they cannot. I doubt, how- 
ever, if there is any man of any intelligence, who 
cannot use a safety razor. 

Perhaps dress, more than anything else, is re- 
sponsible for large and small extravagances, es- 
pecially by those of small incomes. 

It has been said that the average employer pays 
less for his clothes than the average employee does, 
and that the majority of well-to-do people, bar- 
ring the newly rich and the snob, are more econom- 
ical in dress than are those of small incomes, who 
seem to think that the man is known by the clothes 
he wears, and that they, therefore, are known by 
the clothes they should not wear. 

I have considered dress in another chapter, but 
[72] 



Petty Extravagances 

in passing, let me say that the average person ex^ 
pends double the amount necessary for plain, sim- 
ple, and appropriate clothes, and that a part of 
this waste is for the purchase of so-called trim- 
mings, which seldom improve the appearance of 
the wearer. 

The car-riding habit is another source of petty 
extravagance. Thousands of people ride instead 
of saving money and aiding health by walking. A 
rain-coat, a pair of water-proof shoes or rubber 
boots, and an umbrella or rain-shedding hat, are 
money-savers and health-makers. Unless you are 
physically unable to walk, walk all you can, walk 
for the sake of your health and for the saving of 
money. 

I am not asking any one to live in a hermit's 
house, for I believe in entertainment. The good 
theatre is an educational institution, but the 
theatre habit is responsible for a proportion of our 
extravagances. Theatre-going has a tail to it, the 
cost of the ticket being but a part of it. It is 
often connected with ice cream and suppers, or 
boxes of candy, and calls for additional clothes. 
In every large city there are maintained stock 
company play-houses, where the best of plays, wel? 
acted, are presented twice daily, and the prices 
are low. Many a student of the drama considers 
these theatres far more educational and beneficial 
[78] 



How to Save Money 

than are those devoted to bright stars, shining in 
a firmament of supporting darkness. They may 
not properly represent the playwright, because 
the star usually takes the bulk of the money, and 
the company may be hired like cattle. The price 
of a good seat in an expensive theatre will cover 
the cost of four good ones in the stock company 
play-house. I am not, however, asking you never 
to see a great play acted by a brilliant star, but 
you do not need to see half as many of them as 
you think you do. Theatre money is not absolutely 
essential, and there should not be theatre money 
to the exclusion of money for real necessities. 

The dining-out tendency is to be deplored. It 
costs many times more than it is worth. The ex- 
pensive dinner is not nutritious. It is the fore- 
runner of dissipation. It leads to every form of 
extravagance. Do not deceive yourself into be- 
lieving that your presence in a fashionable cafe 
helps you into society, for it has no tendency that 
way. It is the other way. The man you work 
for has no respect for you, because he knows you 
cannot afford to dine in expensive places. He 
looks upon you as a fool, because you are a fool. 
Turtle soup and terrapin, champagne and mixed 
drinks, are never near the door which opens into 
good society. The show-off dinner shows you off 
in a way you do not realize. I am not referring 
[74] 



Petty Eoctravagances 

to an occasional evening at a restaurant or hotel, 
where good food is served at reasonable prices, be- 
cause the stomach, as well as the mind, needs an 
occasional change ; but extravagant eating is dou- 
bly extravagant when it affects both the health and 
the pocket-book 

Smoking has become so general, and is practised 
by so many high-grade people, that the subject is 
very difficult Lo approach without giving the ap- 
pearance of prejudice. The statement may be 
made, how^ever, that ninety per cent of habitual 
smokers would, if placed under oath, say that they 
wished they had never begun the habit. There are 
two kinds of smokers, the extravagant smoker, and 
the one who does not expend much money for his 
tobacco. 

Whether or not smoking is to be condemned is 
a question which each one must settle for himself, 
but extravagant or excessive smoking is without 
excuse. Not one smoker in a million can tell the 
difference between a good cigar and the very ex- 
pensive one. He buys his cigars by price, not to 
suit his taste. There is very little reason for 
smoking a cigar which retails for more than ten 
cents. The quality of cigars above this price 
is largely confined to the name. 

If you are bound to smoke, cultivate the pipe 
habit, — a good pipe costs very little, — and first- 
[75] 



How to Save Money 

class tobacco is not expensive. You are not likeljr 
to smoke as much with a pipe as with a cigar. The 
healthiest pipe to use is one that is absorbent, like 
the old-fashioned corn-cob, which costs five cents 
or less, and which may be thrown away every few 
days. 

It is a significant fact that a proportion, an'd, 
perhaps, a large one, of professional men and 
brain-workers who smoke, prefer the pipe to the 
cigar. Then, smoking a pipe eliminates treating, 
and treating is responsible for part of the expense 
of cigar smoking. 

If you ask me for advice about smoking, I would 
say do not smoke; but if you will smoke any- 
way, cultivate the pipe habit, unless you are finan- 
cially able to smoke good cigars without feeling the 
cost. 

Gum chewing is another petty extravagance. 
There is absolutely no excuse for it. It does not, 
I believe, contribute one dot to good digestion or 
health. I do not think that a reputable physician 
would recommend it. True, it may not do any 
harm; but it is an expensive habit and one which 
is very disagreeable to others. It certainly 
cheapens the person who does it. 

Habitual candy eating is not only injurious to 
health, but it is an extravagance without excuse. 
A moderate amount of good candy does not in- 
jure the digestion and is a source of satisfaction, 
[761 



Petty Extravagances 

and I would not bar it out, but the eating of candy, 
as it is usually taken, is absolutely injurious and 
altogether too expensive to be justifiable. 

Trying to make a show, — I have spoken of this 
in other chapters, — is one of the greatest menaces 
to sense and economy. It accomplishes nothing, 
except to make a fool of its practitioner. It 
makes no difference whether it is confined to the 
multi-millionaire, to the merchant, to the house- 
wife, or to the shop-girl, it is the personification 
of vulgarity and social idiocy. It stands for 
everything low and contemptible. It is responsible 
for much extravagance, and never gives any one 
a position in any society, no, not even in the low- 
est, for the show-man or the show-woman, be- 
decked with real or paste diamonds, has no respect 
for others of his or her kind. 

The desire to wear jewelry of any kind, espe- 
cially expensive jewelry, could not exist in true 
civilization. 

I know that I am treading upon dangerous 
ground, because some men, and most women, say 
that they love jewelry for art's sake, and believe 
that their admiration is genuine. I will speak of 
it here only as it affects the moderate pocket-book. 
The idea that diamonds, and other expensive self- 
decorations, are good investments is based upon a 
wrong standard. 

The love of expensive jewelry has impoverished 
[77] 



How to Save Money 

many a woman, yes, and has done worse for her. 
Many a beautiful hand has become unattractive be- 
cause of the too many rings worn upon its fingers. 
Many a poor clerk has purchased a watch alto- 
gether too expensive for him. The money has 
gone into the case, not into the works. Thousands 
of young men have gone without proper under- 
clothing that they might accumulate sufficient 
money to buy a hundred-dollar ring for a ten-dol- 
lar girl. 

Right here may I not speak of the bride's trous- 
seau, which usually costs three times more than 
the bride's parents can afford? The very prin- 
ciple of it is wrong. It enables the wife to begin 
in extravagance. It sets the wrong pace at the 
start. 

Expensive wedding tours, by those who can 
hardly afford local car-fare, frequently leave a 
mark which is never eradicated. 

In closing this important chapter let me not 
leave the reader with the impression that I would 
take from him many of the little pleasures of life, 
those inexpensive things which cast a glow upon 
our everyday gloom, and which make for individ- 
ual and general happiness. I have simply 
attempted to warn him against any expenditure 
iliat he cannot afford, and to show him that the 
music of true economy and genuine happiness 
never comes from the jingling of coin. 
[78] 



Dress 

CHAPTER VIII 
DRESS 

IN the chapter entitled " Petty Extrava- 
gances " I have spoken of dress, but it seems 
advisable to consider it by itself, for extravagant 
and inappropriate dressing is very close to the 
principal source of failure. 

I am not asking any man to dress habitually 
in khaki clothes, or any woman to wear contin- 
ually burlaps and calico, although I must admit 
that if this were a common custom, most of 
us would be happier, healthier, and better. 

The habit of adorning the body appears to 
have started with the pre-historic savage. The 
first thing he did, after he knew enough to do 
anything, was to decorate his body, either with 
paint or clothes. This continued in various stages 
until commercialism was placed upon the throne, 
and business, always selfish and shrewd, saw in 
dress its most magnificent money-making oppor- 
tunity. It found willing devotees. 

To-day a large proportion of the manufac- 
turing and retail business of the world is con- 
fined to the making and selling of outer clothes. 
Fully one-half of the advertisements, which ap- 
[79] 



How to Save Money 

pear in the daily newspapers, and one-quarter 
of those in the magazines, exploit the outer gar- 
ments of men and women and those things which 
stand for appearance and show, and not for com- 
fort and necessity. 

At a recent World's Exposition, the authori- 
ties found it necessary to place special police sur- 
veillance around an exhibition of fashion, which 
protection was not needed for any other exhibit 
on the grounds. 

Crowds are seldom found in front of the show- 
window presenting necessary underwear, or 
clothes for service and comfort; but are found 
gazing at the commercial display of hats and ex- 
pensive outer garments, which are intended to 
adorn both men and women, especially the latter. 

The tendency, and I may say, the almost in- 
sane desire to look well on the outside, or to look 
better than our neighbors, is responsible for about 
half of all extravagance, and for hundreds of 
thousands of failures. 

The criterion of dress is not appropriateness, 
but a show of expense. It has little to do with 
comfort or with attractiveness. To dress as well 
as, or better than, our neighbors, is a deplorable 
ambition, which insures failure, and which is re- 
sponsible for over-work, the extravagance of over- 
dressing, and the inappropriate decoration of our 
[80] 



Dress 

outsides, from our bodies to our houses. It is 
without excuse, and is often criminally wrong, 
and the cause of half of our downfalls. 

In the first place, it is foolish, because it does 
not accomplish anything. The over-dressed per- 
son has no respect for one of her kind. The 
most extravagantly dressed people cannot cover 
up the size of their incomes. Folk know what 
they are worth, whether or not they buy their 
clothes for cash or on instalments, whether or 
not they pay their bills, whether or not they can 
afford to dress as they do. If they over-dress, 
or dress beyond their means, the people they intend 
to impress look upon them with scorn, although 
half of these folk may be as foolish and do the 
same thing. 

It is a fact that the best people, and often the 
richest people, dress the simplest, although it is 
unfortunately true that some multi-millionaires 
are shoddy in appearance and make as vulgar 
displays of their money as do the genuinely 
shoddy. 

Decent people, intelligent people, and well-to- 
do people are not addicted to vulgar or extrava- 
gant display. Expensive clothes, worn especially 
by those of moderate means, are vulgar and show- 
lack of character and dishonesty on the part of the 
wearer. 

[81] 



How to Save Money 

Over-dressing to-day is often the cause of 
poverty to-morrow. 

Unless your income is large, you cannot have 
expensive clothes, in justice to yourself, your 
family, your business, and your future. 

If you would save money, protect yourself, and 
command the respect of truly respectable men 
and women, dress within your means, dress mod- 
erately and inexpensively, and remember that the 
clothes which look well need not be those which 
cost the most. 

Any attempt on your part to dress beyond 
your means, or to use yourself as a frame for the 
display of fashion, reacts against you and does 
not pay when viewed from any standpoint. 

This subject is again spoken of in the chap- 
ters entitled " Extravagance," " Living Beyond 
Our Means," and " Petty Extravagances." 



[82] 



Taking Advice 

CHAPTER IX 

TAKING ADVICE 

IN the unabridged catalogue of everyday life, 
probably nothing occupies a more conspicuous 
or voluminous space than that of advice-asking 
with or without advice-taking, particularly by 
would-be investors, and others, who have small 
sums of money waiting for proper placing. 

It has been said that something-for-nothing 
is worth just what is paid for it, — nothing, — 
and that free advice belongs to the something- 
for-nothing class. As a matter of fact, this popu- 
lar notion or estimate of the value of advice is 
far removed from truth. 

Advice is one of the greatest of business and 
social commodities. 

To condemn advice, as a whole, because there 
is much bad advice in circulation, is as foolish 
as it would be to object to bread-eating because 
some bread is sour. 

Only the fool is sufficient unto himself. The 
wise and successful man never settles an impor- 
tant question by himself alone, whether the mat- 
ter be of investment or of other purport. His 
accomplishments are due to his composite qual- 
[83] 



How to Save Money 

ities, — to his ability to combine what he knows 
with what others know. He reserves for himself 
the right to throw the casting vote, but he never 
does it until he has sifted conditions through the 
minds of others. 

It is axiomatic that anything more than ordi- 
nary success is due to inclusiveness, — to the 
ability to know what others know, or rather, to 
use what others know. 

Do not misunderstand me. I do not mean to 
say that the man of success does not think for 
himself. He does. The volume of his self- 
thinking is proportionate to that of his action 
and to the extent of the profitable result. 

From every standpoint, — from that of policy, 
selfishness, and safety, — advice should be sought 
and followed, to some extent, at least, provided 
intelligence is in evidence at every stage. 

In these rapid and strenuous times, things have 
become specialized, and are managed by special- 
ists, — too much so, I think, because it has forced 
the all-round man out of business. But so long 
as this condition maintains, we, too, must special- 
ize to a greater extent than was necessary long 
ago, and we must know one thing much better 
than all others, and realize that others know other 
things better than we do. 

While none of us are infallible and while 
[84] 



Taking Advice 

error is inevitable, the advice of an honest, con- 
servative, successful banker is worth more to the 
would-be investor, than is the composite opinion 
of a hundred college presidents, — you may mul- 
tiply the number of college presidents, if you will. 

The lawyer may be conscientious, and so may 
be the minister, but if they know the practice of 
their professions as they should know it, there 
is every reason why they would be poor and in- 
accurate weighers of financial things. 

I am speaking, of course, upon general prin- 
ciples, because many professional men are good 
financiers, but professional men are, as a rule, in- 
competent to travel very far from theoretical 
fields. 

Experience counts for as much as ability does, 
and men out of business, whatever may be their 
natural abilities, are too far from business to 
manipulate business. 

No small investor, or investor of any size, for 
that matter, should place his money in any direc- 
tion without obtaining advice from two or 
more persons competent to weigh financial values. 

Let us suppose, for example, that a young man 
can save twenty-five dollars a month. This 
twenty-five dollars, small as it is, is more to him 
than are twenty-five thousand dollars to a man 
of extensive property. It is his duty to place it 
[85] 



How to Save Money 

at the minimum of risk, to secure for it the max- 
imum of security. He cannot aiford to speculate. 
Much as he desires a high rate of interest, 
he should not take the chances which usually 
accompany large profits. He hears of a certain 
opportunity, which may be industrial stock. Even 
though he may be acquainted with the concern, 
and personally know all of its officials, he should 
thoroughly investigate what is back of the stock, 
refusing to allow his own opinion to count if it 
cannot be substantiated by the opinion of others. 
The easiest and best way for him to go at it, is 
to consult with conservative and able men, who are 
in a position to know whether or not this stock 
is worth buying. He should not depend upon the 
advice of any one man, no matter how reliable 
that man may be. We are all subject to bias, 
and many a man who is fair up to his light, may 
be the unfairest of all. We are children, or men, 
of circumstances; we cannot follow, with safety, 
the road staked out by ourselves, or by any one 
individual. No one man ever made a chart safe 
to steer by. No one man by himself ever con- 
structed an engine that was worth the cost of set- 
ting up. No one man ever did anything, or knew 
anything, wholly by himself alone. There is no 
such thing as individual originality in its abso- 
lutely pure state. Success is due to adding to 
[86] 



Taking Advice 

the little we know, the much that others know. 
Safety is vested in the composite. 

If the men visited by the young man do not 
know anything about investments, they can re- 
fer him, undoubtedly, to others who do know if 
the investment is worth while. If he cannot find 
at least two reliable and conservative men, who 
have no interest in the stock mentioned, to ad- 
vise him to purchase it, he had better let it severely 
alone. 

I think one may establish an invariable rule, 
subject to no exception, that stock, or any other 
form of security, is not reasonably safe, unless it 
is unqualifiedly recommended by as many as two 
honest and conservative business men familiar 
with investment matters. 

In the interest of safety, I would advise the 
small investor to keep away from any form of in- 
vestment, even if a dozen business men recommend 
it, if two or three equally good business men con- 
demn it. 

The man with a small income had better lean, 
and lean heavily, towards the side of over-care- 
fulness. 

Most emphatically would I advise the small 

investor to place no dependence whatever in any 

statement made by any person interested in the 

stock for sale, unless such claim is too reasonable 

187] 



How to Save Money 

to admit of suspicion, or is backed up and endorsed 
by outsiders. 

There are three kinds of investments, the risky, 
the reasonably safe, and what may be considered, 
commercially, as absolutely safe. Of course, 
nothing is absolute, but I will not change the 
word. The small investor, the wage-earner, and 
salary-receiver have no business to consider other 
than the last. This class of investment has the 
support of conservative and able business men 
and financiers. The thing of unknown value is 
not likely to have much value. It is pretty hard 
to keep a good thing down, and an investment 
worth while is not kept under a business bushel, 
but the light of it shines to the world. 

The best advisers upon investments are, as a 
rule, presidents and other high oflScials, represent- 
ing banks and banking houses. They are not 
speculators, they hold their positions on account 
of their conservatism and extreme caution. They 
are not interested in other than clean and safe 
securities. They are not likely to be biassed. 
But I would not advise the small investor to 
trust any one of them implicitly, because that 
particular one may be prejudiced from self-in- 
terest, or from other motives, and no one is 
infallible. It is better, therefore, to seek the ad- 
vice of several of these men. If they agree, he 
[88 1 



Taking Advice 

may feel safe. If they do not, he had better con- 
sider something else. 

Advice then, if it is of the right kind, is of 
importance, and of vital consequence. To refuse 
to ask it, or accept it, shows pronounced pig- 
headedness and a tremendous lack of reliability. 

Ninety per cent of all the losses which have 
fallen upon small investors, would not have oc- 
curred if they had obtained good advice and fol- 
lowed it. 

All of our mistakes and losses are not due, 
necessarily, to personal inability or ignorance, but 
to that sort of unheroic daring which seems to 
order us to do what we please, to enter a blind 
pool with eyes covered and with ears closed. 

He who knows it all, knows nothing. He who 
knows how little he knows, knows much. The in- 
dividual is weak, the composite is strong. 



[89] 



How to Save Money 

CHAPTER X 

LOANING TO FRIENDS 

I WOULD not adulterate, by even a microscopic 
drop, the milk of human kindness. We 
should help each other, for the more we help each 
other, the more we help ourselves. Reciprocity 
is one of the great elements of success; without 
it nothing is possible, save the product of selfish- 
ness, and the results of selfishness and avarice 
should have no place in human affairs. 

Things, at their best, are hard to bear, and 
most of us are straining our bodies and minds. 
Perfection and certainty do not exist in this 
world. If we would do anything, we must will- 
ingly take reasonable chances. To do otherwise, 
is to do nothing. 

Many a man obtained his profitable start in 
life through the kindness of a friend, who loaned 
him money, or in some other way assisted him at 
a critical period in his career, and so enabled him 
to carry his load over a dead centre. 

No man with a heart in him, or with a nor- 
mal amount of sense, would condemn the loan- 
ing of money to friends, or would he make any 
other rigid rule against helping others. The es- 
[90] 



Loaning to Friends 

tablishment of such a law would bolt the life oiit 
of love, — would lower us below the animal, for 
even the beast is generous. Here, as in all else, 
judgment must be exercised. It is better to 
be generous than to practise the opposite, but 
it is far better to be fair to yourself, as well 
as to others, always remembering that true 
generosity considers the giver as well as the 
receiver. 

But the promiscuous loaning of money to 
friends, who are financially embarrassed, is pre- 
carious, unfair, and ungenerous, and is as likely 
to injure the receiver as the giver. It is not a 
financial investment, and should not be so con- 
sidered. It is an accommodation, a thing of kind- 
ness, a thing to be done, or not to be done, as 
conditions justify. In making the decision, do 
not allow your generosity to get the better of 
your judgment, or your judgment to selfishly 
influence your generosity. 

Your friend comes to you to borrow one hun- 
dred dollars. You must consider, first, whether 
or not you can afford to give him the money, 
whether or not you can take the ordinary or extra- 
ordinary chance in justice to yourself and your 
family. If you decide that you cannot afford to 
do this, then you should not loan the money. The 
security you have may be limited to the good 
[91] 



How to Save Money 

intention of the borrower. If you can loan this 
money, or rather, if you can afford to give it, and 
the borrower is deserving, by all means accom- 
modate him. If, on the other hand, the borrower 
is not deserving, refuse him whether or not you 
can stand the loss. If he is deserving, then it is a 
question of how great a sacrifice you must make 
to accommodate him. At times you would be jus- 
tified in making a great sacrifice. At other times 
any sacrifice would be wrong. 

It is undoubtedly true that the majority of 
financially embarrassed people do not deserve con- 
sideration. They are in their present deplorable 
condition because they were unwilling to save, and 
refused to make reasonable sacrifices, and, as a 
rule, they are without good judgment and have 
little moral stamina. They would rather borrow 
than make any effort to earn. They would rather 
do what amounts to stealing than to save money. 
They would work harder to borrow a dollar than 
they would labor to earn two dollars. They are 
willing that their friends should take the chances. 
They would pay their bills if it were convenient 
for them to do so, but they would make no effort 
to meet an obligation. These men deserve no 
assistance, and only morbid sentiment would sug- 
gest that any one help them, unless the aid goes 
to innocent members of their families, who would 
[92] 



Loaning to Friends 

suffer hard privation if outside aid was not forth- 
coming. 

One would be justified in helping even the 
spendthrift, if his family cannot be assisted in any 
other way. The loan, then, is to the family, not 
to the head member of it. 

There is a class of borrower, who is in des- 
perate straits through no fault of his own. He is 
thoroughly honest and deserves to be considered. 
He is a hard worker, would save if he could, and 
is not extravagant. He intends, always, to return 
the money he has borrowed; he will make any 
sacrifice to do so. This man is deserving of assist- 
ance, and the lender is justified in aiding him, 
provided he can do so without undue sacrifice; 
and sometimes he should make even more than 
ordinary sacrifice for his friend in trouble. 

Here is where human kindness comes in. Here 
is where we are justified in sacrificing ourselves 
for our friends. The man who will not do this, 
unless it causes hardships which he has no right 
to sustain, is unmanly, ungenerous, and a poor 
citizen. 

Another class of borrowers would obtain money 
for business purposes, — not because they are 
financially embarrassed, but because they desire to 
increase their business or to do something else 
equally legitimate. But the man of small income 
[93 1 



Hoic to Sa-ce Money 

should not consider them as investment proposi- 
tions, even though :hty oner an exorbitant rate of 
interest. These r/.en. if thoroughly honest and 
reliable, can ob-a::: -onev from the bank, or from 
professional rr.cr.ry-ler.ders. or bv furr.ishing busi- 
ness or other secur::v. vrr.:ch may be acceptable to 
those who can aS'ord to t^ake speculative chances. 

In loaning m.oney, as well as h: dt^ing anything 
else, one should consider oneself as m.uch as one 
considers the borrower. 1'. is unfair and wrong 
for a man of responsibhity and fannly to throw 
his money at the fellow who is down, unless he 
feels that it is his duty to do so. or, that by so 
doing, he will all the innccen^ and dependent, or 
is reasonably sure that he w^^i get his money 
back. 

Most n'.en. who have eaten both the bread and 
pie of hfe. and have taken no thought of to-m^or- 
row, expect the ntan who has earned the right to 
eat pie, by getting along whhtut it. to share both 
the bread and pie with the fellow who does not 
deserve either, 

To sum up: — The small investor, or the man 
of moderate inccn-.e. sh :uld never loan money as 
an investment w::h:'Ut security, If he wants to 
help a friend, he shtuld place his friend's necessi- 
ties and his own side by side. If his friend 
desen-es help, or his farnilv are in need, it is ]u.5- 

:94"i 



Loaning to Friends 

tifiable to lend him the money, provided the lender 
can afford to give it, or is able to sustain the loss. 
This loaning of money is often a question of 
friendship, and is not usually a business proposi- 
tion. It should never be done thoughtlessly or 
upon the spur of the moment. The would-be bor- 
rower and the lender should talk the matter over, 
each should be frank with the other, and aid 
should be given when it is deserved and the helper 
can afford to help. 



[95] 



How to Save Money 

CHAPTER XI 

TAKING SPECULATIVE CHANCES 

THE speculator is nothing more nor less than a 
financial gambler, although all speculation is 
not necessarily dishonest. But, nevertheless, the 
element of chance must accompany all specula- 
tion, and is not limited, by any means, to purely 
speculative manipulators. Opportunity for risk 
and chance is a part of the making of success, and 
accompanies all business-doing. 

There is nothing sure in this world, in business 
or out of it, and some risk must be taken by every- 
body who would accomplish anything. 

There is right speculation and wrong specula- 
tion; the difference is somewhat a question of 
degree ; and it is extremely difficult to trace, defi- 
nitely, the line between what seems to be pre- 
eminently right and what would appear to be 
essentially wrong. 

Commercially speaking, the speculator is not a 
doer of regular business ; he does not obtain 
standard goods that he may sell them at a profit ; 
he deals more in chances and takes large risks ; and 
he succeeds, if the price he receives is larger, on 
an average, than the price he pays. In the trans- 
[96] 



Taking Speculative Chances 

action of his business the element of chance is 
more than normal, and there is a larger opportu- 
nity for loss, and a greater one for unusual profit, 
than would be likely to occur in the buying and 
selling of ordinary commodities. 

Whether or not speculation, as it is commonly 
defined, is right or wrong from the standpoint of 
the moralist, no man of small income has a moral 
or business right to take so-called speculative 
chances, — to place himself in a position where 
there is more than common risk. To do so is 
unfair to himself and to his family, and is pretty 
sure to result in complete financial breakdown. 

Speculation is for those who make a business 
of it, — who are willing to play the game to win 
or to lose, and who are financially able to sustain 
loss, looking at it as inevitable, as a natural con- 
sequence of speculation, feeling that the balance- 
sheet at the end of the year will show some profit, 
but all the time recognizing the possibility of 
complete failure. 

These men train themselves for their work, they 
make a business of taking chances. Some of them 
succeed; most of them fail in the end. But even 
if they all succeeded, their success would not jus- 
tify any one outside of their kind in taking specu- 
lative chances. 

While the trained speculator may win, he who 
[97] 



How to Save Money 

does not understand speculation, who is not keyed 
up to it, is absolutely sure of failure. Probably 
the love of speculation is, with extravagance, 
responsible for ninety per cent of loss. 

Keep out of speculation. Refuse to take the 
maximum risk, or even more than the minimum 
risk, unless you are trained in the work and can 
meet disaster as calmly as you would success ; and 
remember that, if you are a married man, your 
willingness to take speculative chances cannot be 
taken as an excuse for any action which is likely 
to bring suffering upon your family. 

It is questionable whether or not you have a 
right to injure yourself, but no one will justify 
you in doing anything which causes the innocent 
to suffer with you. 

Being fair to yourself is not enough. You 
must be fair to those dependent upon you. 

You cannot be sure, but you can be reasonably 
so, and anything less than the reasonable is 
wrong. 



[98] 



The Savings Bank 

CHAPTER XII 

THE SAVINGS BANK 

rvy HE savings bank, or, as it is sometimes 
•^ called, the institution for savings, is a 
repository for money, authorized by, and organ- 
ized under, special State banking laws, and it is 
not under the jurisdiction of the Federal Govern- 
ment. 

Many of the States have enacted and execute 
the most strenuous regulations, which place their 
savings banks under the strictest supervision, 
compelling them to conduct their business, and 
particularly the investment side of it, in the most 
conservative manner, that the risk of failure or 
loss may be reduced to the minimum. 

These banking laws, when consistently complied 
with, — and to the credit of the savings bank fra- 
ternity it may be said that few depart from them, 
— do not permit the bank to invest the depositors' 
money except for the purchase of the highest 
grade of bonds, for the loaning of money on mort- 
gages of the better class, and in the ownership of 
real estate. In the States where the laws are 
particularly strict, the bank can purchase only 
preferred bonds and other high-grade securities, 
[99] 



How to Save Money 

and is not permitted to loan upon real estate more 
than sixty per cent of the assessed or real valua- 
tion. 

Most of the States have done all that they pos- 
sibly can do to safeguard the depositors' money, 
the legislatures realizing that the failure of a sav- 
ings bank means loss to the people who can least 
afford to lose. 

The savings bank, then, becomes a public 
charge, and offers every reason for every kind of 
legislative safeguard. 

The savings bank is governed or managed by 
a board of trustees, no member of which is allowed 
to receive any salary or emolument for his services. 
The board elects a president, who usually draws 
no salary, but who may do so if he is active in the 
management of the bank; and a treasurer, who 
acts as executive officer, and who appoints the 
necessary clerks and assistants, none of whom are 
paid more than reasonable salaries, except in some 
places where the laws are not strictly enforced 
and the management is neither conservative nor 
economical. 

The good savings bank is, in reality, a philan- 
thropic institution, under the management of the 
strongest, most conservative, must reliable and 
highest grade of men in the community, who vol- 
untarily give their services for the benefit of the 
[ 100 ] 



The Savings Bank 

people, and because the position of trustee is a 
highly honorable one. 

Other savings banks, legally operated in some 
States, while depositories for money, and while 
they render, apparently, the same service to depos- 
itors, are money-making institutions, established 
and maintained for the benefit of the stockholders. 
They are usually connected with trust companies, 
and are conducted as separate departments. They 
are not, as a rule, as conservatively managed, or 
as safe, as are the regular mutual savings banks, 
which are not supposed to be money-makers. 

All savings banks are subject to State inspec- 
tion, the severity of which is dependent upon the 
strenuosity of the laws controlling the banks. 

The large majority of savings banks are finan- 
cially sound, conservative, economical, and care- 
fully managed, and their depositors may be 
assured of what is very close to absolute security. 
But there are scattered throughout the country 
quite a number of small and badly managed banks, 
usually controlled by one man, or a combination 
of men, who run the banks for their own profit, 
and who loan the money, either to themselves 
indirectly, or to others who are in league with 
them. In outward appearance, these banks may 
show every indication of solidity, and only careful 
investigation will locate their weakness. They 
[ 101 ] 



How to Save Money 

are continuously failing, and sometimes the depos- 
itor loses all his money; but usually he receives 
from fifty to seventy-five per cent of his deposit. 
jVIany of these banks offer more than the current 
rate of interest, using it as a bait to attract the 
depositor. 

It is possible that a well-managed savings bank, 
under certain local conditions, can pay as much 
as five per cent, but no conservative business man 
would recommend such a bank, unless he was 
thoroughly familiar with all that is going on in- 
side of it. 

Upon general principles, I would not advise 
any one to deposit money in any savings bank 
paying more than four per cent. Money is worth 
less to-day than it used to be ; and because money 
is cheap, interest is low. Loans are frequently 
made at three per cent, and some bonds do not 
pay more than two per cent net. Good four per 
cent bonds yield less than four per cent, unless 
they are purchased at par. 

The first-class savings bank cannot, and will not, 
loan its money except on gilt-edged securities, nor 
will it purchase any questionable security, or any- 
thing of speculative value. Consequently, it 
cannot easily obtain more than five per cent net 
on its investments, that is to say, its money can- 
not possibly earn more than five per cent, on an 
[102] 



The Savings Bank 

average, and it is likely to earn less. From these 
earnings must be subtracted the expense of run- 
nmg the bank. 

It is obvious, then, that no conservatively 
managed institution for savings can afford to pay 
its depositors much more than four per cent, 
although it may occasionally be permitted to give 
an extra dividend. 

Beware, then, of the bank paying more than a 
normal rate of interest, which should not be far 
from four per cent. 

It is well to give your local bank the preference, 
but do not do so unless you are sure of its reli- 
ability and strength. Most savings banks receive 
deposits by mail, and I would advise the use of 
banks located in States where the banking laws are 
strictly maintained, unless the local bank has a 
reputation too high to be questioned. A few 
banks will not receive deposits from those outside 
of their territory, but the majority of them do 
not make this restriction. 

The frequent failure of savings banks has 
naturally prejudiced many people against them, 
but this prejudice is unfair to the savings banks 
in general. Practically all of the failures are 
confined to small institutions and to those man- 
aged by incompetent or dishonest men. Occa- 
sionally a small bank goes to pieces on account of 
[103] 



How to Save Money 

defalcation, because the business done by it is not 
large enough to sustain a considerable loss. 

Defalcation on the part of the bank officials is 
always possible. No law, or regulation, or 
inspection, can completely guard against it. 
There is always opportunity for theft. Nor is it 
possible for any one to know whether or not a 
trusted official will fall. Many an honest man, 
under severe temptation, may use the money of 
the bank for speculation, with a genuine inten- 
tion of returning it. He fails, as most speculators 
do, and, consequently, cannot return the money. 
If the bank is small, the whole, or a part, of the 
money comes out of the depositors. 

It may seem hardly fair for me to discriminate 
against the small bank, because many of them 
are as solid as the Rock of Gibraltar, and most 
of them are managed by men whose integrity is far 
above par. But it is, nevertheless, true that 
while human nature is weak, defalcation is always 
possible, and the robbing of a small bank usually 
wrecks the bank, while the same amount of money 
taken from a large institution would not affect 
the depositors. It is always possible for the 
treasurer, or other official, of a small bank, to 
make false entries, and to cover up his dishonesty 
for an almost indefinite period, and, as he largely 
controls the finances of the bank, he can easily 
[ 104 ] 



The Savings Bank 

wreck it ; while no one official has the same oppor- 
tunity in a larger bank. At most, he can steal 
but a small sum compared with the total amount 
of deposits. A defalcation of fifty thousand or 
one hundred thousand dollars may ruin a small 
savings bank, while a theft of the same size would 
not affect a large bank. Then, frequently, 
trustees do not exercise their prerogative, but 
leave everything to the treasurer. This gives 
him the opportunity for embezzlement. 

The large bank, on the other hand, is officered 
by many officials, and no one of them can get hold 
of much of the money without the knowledge and 
consent of others. 

As I have already said, there are several small 
banks run wholly in the interest of their trustees 
or officers, and although none of these men may 
be direct defaulters or embezzlers, they loan the 
bank's money, either to themselves directly, or to 
men they are connected with, often taking unfair 
and even criminal risks. Sooner or later the bank 
will go down. 

Comparatively few large banks have failed, and 
few of them have been affected by defalcation or 
by occasional bad investments. They are large 
enough to stand a loss of reasonable size and they 
can sustain one many times larger than that which 
would wreck a small bank. 
[105] 



How to Save Money 

I would advise no one to place money in any 
savings bank, except in those of national reputa- 
tion, until he has investigated the standing of the 
bank by making the most searching inquiries of 
local bankers and reliable business men; and I 
would further advise him to give the large bank 
the preference, upon general principles. 

If his local bank is small, and if it is not man- 
aged and officered by honest local business men, I 
would advise him to deposit his money in some 
larger savings bank, located elsewhere. 

An officer of any national bank, or any bank 
president, or the leading financier of the town, 
can give him all the information he desires. 

It is well to inquire of more than one, for 
many an honest man is biassed by special inter- 
ests. 

If one would be on the safest side, it would be 
well for him to make inquiries outside of his town, 
addressing them to the officials of some national 
bank or savings bank of extensive reputation. 

The fact that there are two or more thoroughly 
good men on the board of trustees may not be 
taken as evidence that the bank is sound, unless 
these men take an active interest in the bank's 
business. Many a good man allows himself to be 
elected a trustee, and gives no attention to his 
duties. Frequently he is placed upon the board 
r 106 1 



The Savings Bank 

wholly for the use of his name. His connection 
with the bank, then, has little significance, and 
does not add to the bank's value. 

Persistent and careful inquiry will enable any 
one to get pretty close to the true condition of 
the bank. 

Better go too far with your inquiries than to 
do otherwise. 

Never deposit in any bank which is not well 
spoken of and which is not supported by the care- 
ful and conservative business men in the town. 

The savings bank is obliged to make an annual 
statement, and this statement is likely to be tech- 
nically true ; but it is not, as a rule, intelligible to 
other than experts. Most reports read well upon 
their faces. Unless you are familiar with finan- 
cial matters, do not allow this report to influence 
you for or against the bank, until you have shown 
it to some one who understands it. Be suspicious 
of the bank which places its office furniture among 
its assets, and which shows other weak collateral. 
Keep away from the bank which lends more than 
sixty per cent of the real value of the property 
mortgaged. But if you are not able to weigh 
financial values, you will have to depend largely 
upon the standing and reputation of- your advis- 
ers. If they are men of character and high finan- 
cial standing, and are not speculators, you are 
[ 107 ] 



How to Save Money 

not likely to go far from right in taking their 
advice. 

The savings bank is certainly the most con- 
venient depository for savings. Its depositors 
may have their money back when they want it, 
although the bank may require from thirty to 
ninety days' notice of withdrawal of the entire 
deposit. This condition is seldom taken advan- 
tage of by other than weak or small banking insti- 
tutions. The first-class and larger savings banks 
invariably waive this condition, and pay in full 
when requested, except in cases of a run on the 
bank, and even then most sound banks do not 
refuse to give the depositor his money when he 
asks for it. 

The owner of mortgages, stocks, bonds, and 
real estate, although his money may be securely 
invested, may not be able to unload, so to speak, 
— to obtain his cash without a long delay, — and, 
therefore, he may have to pay something to some- 
body, usually a broker, for the privilege of 
obtaining his money. The savings bank deposit 
is, on the other hand, available cash, and is, fur- 
ther, interest-earning cash. 

The fact that one can get his money when he 

wants it from the savings bank may operate 

against this form of deposit for those who have 

an almost criminal desire to use their available 

[108] 



The Savings Bank 

money. For this reason, it may be better for 
them to place their money where they cannot get 
it without much trouble and delay. But I have 
not much sympathy with this class of people, 
anyway. They do not amount to anything, and I 
am not in favor of establishing any method of 
investment for their benefit. 

The savings bank deposit has another advan- 
tage over other forms of investment because the 
bank is willing to take small deposits, enabling 
one to begin with a dollar, and to deposit system- 
atically. Each dollar draws the full rate of inter- 
est from the beginning of each quarter. 

Let us suppose, for exam.ple, that you can save 
a dollar a week. You can deposit this dollar 
every week in a savings bank, while you cannot 
possibly invest it, dollar for dollar, in any other 
way. You may keep it in the bank until it reaches 
a thousand dollars or more, or until you have 
sufficient money to purchase a mortgage, a bond, 
or other security, or you can open an account in 
another bank, if your bank refuses to receive 
over a thousand dollars from any one depositor. 
If you are satisfied with four per cent, and you 
cannot get more than five per cent with much 
degree of safety, you may prefer to let your 
money remain in the bank, or to use several sav- 
ings banks. Thousands of wealthy people, who 
[109] 



How to Save Money 

know how to invest money, u^e savings banks 
exclusively or partially, depositing even as much 
as hundreds of thousands of dollars in them. 
They receive, usually, four per cent, and their 
money is secure, if they use good banks. 

Some systematic savers and investors use sav- 
ings banks as a legitimate make-shift. As fast 
as their accumulation reaches the proper size they 
withdraw it, that they may invest it in something 
paying a little higher interest, which may and 
may not be done at a risk. 

I would recommend to every one that he use the 
savings bank at the start as the basic depository 
for his savings, whether or not he passes his money 
through the bank to something else. Further, I 
would advise all who begin to save, not only to 
use the savings bank, but to make their deposits 
systematically and conscientiously, and never to 
withdraw their funds for any other investment, 
unless they are sure that the security offered is 
as sound and as safe as the bank is, or nearly so. 

Every one, unless he has accumulated consider- 
able property, should make it a point to deposit 
something in the savings bank every week or 
every month. 

This saving, and systematic depositing, should 
become a matter of principle. If the saver deter- 
mines to save something at stated periods, he 

riioi 



The Savings Bank 

should make a deposit on each day decided upon, 
even though it be only a dollar. To break from 
this systematic saving rule interferes with the 
very principles of saving, economy, and protec- 
tion. 

Anything worth doing at all should be done 
systematically. Without system we do nothing 
well, and mighty little at all. 

He who systematically saves, no matter how 
small the amount may be that he puts aside, has 
one good qualification, at least, and is doing 
something which every sensible business man 
respects and will accept as substantial proof of 
good character, faithfulness, stick-to-it-iveness, 
and ability. 

Even a weekly or monthly visit to the savings 
bank makes for good, for the depositor comes face 
to face with men of standing, and often with men 
of mark, and their acquaintance or friendship is 
worth cultivating. The depositor, who period- 
ically calls at the savings bank, gradually attracts 
the attention of the bank officials, and this 
acquaintance, although it may not be intimate, is 
likely to be of some use to him. 

Many a business man gives decided preference, 
when engaging a clerk, to one who has a savings 
bank deposit. 

A savings bank book of deposit is a positive 

[111] 



How to Save Money 

asset. It stands for more than its face value. It 
is a book of recommendation as well as of deposit. 

I would advise every young person, and every 
one of any age, who has not begun to save, to 
make a savings bank deposit to-day. If he has 
only a dollar at his disposal, it is a start in the 
right direction, and the right start seldom ends 
at the wrong place. 

Take care of your book of deposit. Do not 
leave it in a bureau drawer. If you have no safe 
deposit box, ask some friend of yours to take 
care of your book for you. If it is lost or stolen, 
immediately notify the bank by telephone, tel- 
egraph, or mail. It is quite difficult, however, for 
the wrong person to realize upon the book, but it 
is possible for him to obtain the money. 



[112] 



United States Government Bond 



CHAPTER XIII 

THE UNITED STATES GOVERN- 
MENT BOND 

fTl HE United- States Government bond repre- 
-■- sents what may be considered as absolute 
security. It is practically impossible for the 
holder of it to lose his money as long as our 
government remains intact and enjoys a fair 
degree of prosperity. 

Theoretically speaking, the intrinsic value of 
the bond is not completely fixed, and it is pos- 
sible for it to drop below its face value ; but, prac- 
tically, it remains firm and sound, its fluctuation 
being limited mostly to the premium paid by its 
purchaser. 

The government can, of course, repudiate its 
indebtedness, but this is something which never 
has occurred, and there is not the slightest pos- 
sibility of its occurrence. 

Should the government fail, it is obvious that 
all forms of American securities would be value- 
less or close to worthless. 

The United States Government bond is, and 
always will be, the standard investment, the one 
thing which may be considered superlatively 
safe. 

[ns] 



How to Save Money 

The only objection to investing in these bonds 
is that they pay the lowest rate of interest upon 
their face value, the purchaser being seldom able 
to procure them without the payment of a pre- 
mium. These bonds hardly ever reach the individ- 
ual purchaser at par. They are usually bought 
by imderwriters, who bid for the entire issue, and 
then job them out, so to speak, to individual 
purchasers, who must pay a premium to obtain 
them. This lowers the net receivable rate of inter- 
est. 

There are two kinds of United States Govern- 
ment bonds, — registered and coupon. 

The registered bond, as its name implies, is 
registered or recorded in the name of its pur- 
chaser or owner. If it is lost or destroyed the 
government will make good. 

The coupon bond is payable to bearer or 
holder, and is practically the same as a bank-bill, 
except that interest is paid upon it. It is nego- 
tiable without registration. If it is lost it cannot 
be replaced. Owners of coupon bonds should make 
a memorandum of the numbers and place it in 
some secure place away from where the bonds are 
kept. A knowledge of these numbers may assist 
the owner in recovering them, if they should be 
lost or stolen. Coupon bonds should never be kept 
in an ordinary office or house safe, which may not 
[114] 



United States Government Bond 

give sufficient protection, but should be placed in 
a safe deposit box or other secure receptacle. 

I would not particularly advise the wage-earner 
or salary-receiver to purchase United States Gov- 
ernment bonds, or to consider them for invest- 
ment purposes, and I say this knowing that these 
bonds offer the very maximum of security. The 
fact that they cannot be had except at a propor- 
tionately high premium, and that they pay the 
lowest rate of interest, is my reason for here 
advising against them, but be it understood that 
I would not take this stand if there were not other 
kinds of investment substantially as secure, 
although, theoretically, they may not be so, 
which pay a higher rate of interest. 

The strong savings bank, for example, not only 
pays more interest, but is practically as safe as 
is the government itself, and the deposit in it is 
net, the interest being reckoned on what the 
depositor puts in. Further, there is no premium 
condition. 

While I am thoroughly opposed to any form of 
investment, for the wage-earner and salary- 
receiver, which presents more than the minimum 
of risk, I see no reason why he should content 
himself with so low a rate of interest as is paid 
by the government bond, when practically the 
same security is obtainable with higher interest. 
[115] 



How to Save Money 

The province of the government bond seems to 
be principally for large investors, to those in 
charge of trust estates of considerable size, and 
to those who desire to salt-down, so to speak, 
large sums of money, which may remain unmo- 
lested and free from attention and care. 

I would advise the small investor to get all he 
can for his money, provided he does not take 
undue risk. He may obtain a fair rate of inter- 
est, with substantial security, by depositing his 
money in a strong savings bank, or by using other 
conservative methods, which I have spoken of in 
this book, and which pay from three and one-half 
to five per cent. 

Let me say here, as I have said several times 
in this book, that the minimum of risk accompanies 
only investments paying not more than five per 
cent, with an occasional opportunity of six per 
cent. The line of safety may be drawn at five 
per cent, although there are a few investments 
paying six per cent, which are reasonably safe. 

For the foregoing reasons only do I refuse to 
recommend in particular government bonds to 
those who can save but a little money. 

However, if one desires to possess the feeling 

which comes from absolute security, and wants to 

have his money where he need never give it a 

second thought, willing that it should earn the 

[116] 



United States Government Bond 

lowest rate of interest, he would make no mistake 
in purchasing government bonds, preferably reg- 
istered bonds, and placing them in a safe deposit 
box, where robbery and loss appear to be impos- 
sible. 

The owner of the registered government bond 
cannot possibly lose his property. The owner of 
the coupon government bond is subject only to 
the possibility of his safe deposit box being 
broken into, — something which has never occurred 
so far as I know. 

But as there are so many other forms of invest- 
ment practically as strong, although theoretically 
weaker, and which pay a higher rate of interest, 
the small investor can get along without hblding 
United States Government bonds. 



[117] 



How to Save Money 



CHAPTER XIV 

THE STATE, MUNICIPAL, AND 
TOWN BOND 

PERHAPS there is in America a State, city, 
or town free from indebtedness. If there is, 
I have never heard of it, and I do not know of 
any one who has. 

Money is borrowed by States, municipalities, and 
towns for various purposes and according to law, 
usually in anticipation of taxes and to pay cur- 
rent expenses, and for the establishment of public 
improvements, like water-works and sewers. 

Comparatively few communities could enjoy 
any of the modern improvements or betterments, 
if the money for their construction was not 
borrowed, either on notes signed by the proper 
officials, or by the issue of bonds. Very few 
improvements are made without the issuing of 
bonds, for most of the money obtained on notes 
is for current expenses. 

The borrowing capacity of any State, munic- 
ipality, or town is limited by law; but the State 
may legally, at its discretion, move the borrowing 
line ahead, even near to the danger point, and 
occasionally it allows it to be passed. 

The State borrows money through act of its 
[1181 



State, Municipal, Town Bond 

legislature or assembly, the municipality by vote 
of its city government, and the town by vote of 
the town itself, subject in all cases to State law or 
regulation. 

When borrowing is done within the prescribed 
limits of indebtedness, without special State con; 
cession, and by legal act of the officials or voters, 
the bonds issued are what may be considered close 
to absolute security, and are to be recommended 
to the small investor, and to others who would 
prefer a fair rate of interest with solid security. 

These bonds pay a low rate of interest, never 
exceeding five per cent, and frequently as low as 
four or three and one-half per cent, except where 
the borrowing community is heavily in debt, which 
condition raises the element of risk. 

For example, the conservative, economically 
managed city, with less than normal indebtedness, 
can borrow money at a low rate of interest, even 
at three and one-half or four per cent, and yet 
sell its bonds above par, individuals or banking 
houses buying the entire issue at a premium of 
from one to even eight per cent. 

Let us suppose that a conservative city desires 
to construct new water-works. The city's 
indebtedness is below the limit prescribed by law, 
its credit is good, it is progressive and growing, 
the security it offers is ample, and there is a cer- 
[119] 



How to Save Money 

tainty that both interest and principal will be 
promptly paid. 

Unless money is especially tight, it can borrow 
at from three and one-half to four per cent; lit- 
erally for less, because it can dispose of its bonds 
at a premium, a thousand-dollar bond selling for 
from one thousand and ten dollars to occasionally 
as much as one thousand and eighty dollars. 
These bonds are usually sold to brokers, bankers, 
and underwriters, who sell them to the public at 
a slight • increase. If the broker pays, say, one 
thousand and thirty dollars for a thousand-dollar 
bond, he would probably sell this bond at from 
one thousand and thirty-five to one thousand and 
forty dollars, or for more. 

As a rule it is difficult to obtain a bond direct 
from the town or city, unless you are a capitalist 
or a member of a syndicate. . 

It is obvious that a four per cent bond, sold at 
a premium, does not pay four per cent net to its 
purchaser, who may not receive more than three 
and one-half to three and seven-eighths per cent on 
the purchase price. 

The intrinsic value of the bond is also depend- 
ent upon the length of time it runs, the thirty- or 
forty-year bond being worth more than the ten- 
year bond. 

If the State, city, or town borrowing is in a 
[120] 



State, Municipal, Town Bond 

good financial condition, and its bonds are legally 
and properly issued, they may be considered as 
offering a security practically as sound as that 
presented by the United States Government bond. 

The bonds of communities of fair credit are 
reasonably safe, but those carrying large indebt- 
edness, which must borrow by special permit of 
the State, should be avoided by the small and 
careful investor. 

Upon general principles I would advise the 
small investor to have nothing to do with a bond 
paying over four per cent, unless a half dozen 
good financiers, who are not interested in the 
bonds in question, expressed emphatically the most 
favorable opinion concerning them; but under no 
circumstances would I advise the purchase of a 
bond paying over five per cent, unless one is able 
to take speculative chances. 

Bear in mind that a bond cannot possibly pay 
more than the rate of interest specified upon its 
face. If it is a four per cent bond, for example, 
it can never give its owner more than four per 
cent, while a share of stock may pay any dividend ; 
but the security offered by the average stock is 
far below that given by the average bond. 

There are some disadvantages to investing in 
bonds : 

First, because of the low rate of interest paid; 
[121] 



How to Save Money 

but this condition prevails with all safe invest- 
ments and should not be considered an objection. 

Secondly, because the selling value of bonds 
may fluctuate. They may be worth more to-day 
than to-morrow ; but when this occurs, the fluctua- 
tions are likely to be small, although I have known 
a high grade of city bond to drop six or seven 
points in a year, not from the face value of the 
bond, but from the premium paid on it. For 
example, let us suppose that you pay one thou- 
sand and sixty dollars for a thousand-dollar bond. 
It is possible that within a year or more you can- 
not sell this bond in the open market for more 
than a thousand and ten or a thousand and twen- 
ty dollars. If you are forced to sell, your loss 
is considerable. There is, however, a fair chance 
that the premium will return to what you paid, or 
close to that figure. You sustain no loss, then, 
or only a slight loss, if you can afford to hold 
the bond. I would advise you, however, not to 
purchase bonds at a high premium. Better wait 
until the condition of the money market is such 
that safe bonds are selling nearer to par. Your 
banker, or other financial adviser, will tell you 
what to do, not only what to purchase, but when 
to purchase. Better keep your money in the sav- 
ings bank until the bond market is low. 

Thirdly, the danger of losing a bond unless it 
[122] 



State, Municipal, Town Bond 

is registered; but a box in a good safe deposit 
vault gives absolute security. The registered 
bonds are safer, of course, but many prefer the 
unregistered ones, because they are more nego- 
tiable and can be sold with no formality. 

The fluctuation of first-class bonds is invaria- 
bly due to the condition of the money market, and 
their holders are not likely to lose on them, if 
they purchased them at a fair premium and can 
afford to hold them over a slump in the market. 

The advantages of a good bond are : 

First, it is considered by all first-class finan- 
ciers, high-grade bankers, and conservative 
investors as offering pretty close to absolute 
security. A high-grade bond is a legal investment 
for all savings banks and is looked upon as the 
best form of security for a loan. 

Secondly, its easy negotiability. A good bond 
is seldom worth less than its face value and is 
about as good as a bank bill. Any bank will 
gladly loan from eighty to ninety per cent of its 
face value, holding the bond as security. As a 
matter of fact, the owner of a bond has what is 
substantially a negotiable bank bill, yet paying 
a fair rate of interest. 

There are on the market large quantities of 
fraudulent, illegal, and worthless bonds, issued by 
mushroom towns, and other communities, which 
[ 12S] 



How to Save Money 

are heavily in debt and without credit. These 
bonds are oifered by irresponsible brokers, and 
usually promise to pay a high rate of interest. 
They are generally handsomely printed upon a 
high grade of paper, and the face of them pre- 
sents an impressive appearance. Occasionally 
these bad bonds are guaranteed to pay but a low 
rate of interest, this being done to avert suspicion. 

Because some bonds offer the very maximum of 
security, many people look upon all bonds as safe. 
This common belief enables dishonest brokers to 
dispose of worthless bonds. As a rule, do not 
purchase bonds issued at distant places, because 
it may not be easy for you to ascertain their 
value, and somewhat difficult to obtain expert 
opinion regarding them. 

The majority of banking houses and brokers 
dealing in bonds are thoroughly reliable, still I 
would not advise the small investor to place 
implicit confidence in any one party, especially 
in any one seller of bonds. He should investigate 
for himself. It is easy to look up the financial 
standing of a town. He may make inquiries of 
the presidents and cashiers of two or three good 
banks, who would gladly impart the information 
desired. The value of good bonds is known to all 
bankers and men of finance, residing in the com- 
munity, especially to the bankers, for bonds are 
[ 124 ] 



State, Municipal, Town Bond 

a convenient and satisfactory form of collateral 
at the banks. 

To make myself plain, let me suppose, for 
example, that you think seriously of purchasing a 
certain municipal bond. Before doing so, I would 
advise you to call upon two or more first-class 
bankers, and ask their opinion regarding the se- 
curity offered. If you are advised strongly by all 
of them to purchase the bonds, you can safely do 
so. If the opinion is not unanimous, let them 
alone. 

Bonds which pay exceeding four per cent do 
not present the best security, although a few four 
and one-half and five per cent bonds are reason- 
ably safe. The community paying more than four 
per cent for money is usually financially weak or 
is very much in debt. 

Comparatively few high-grade bonds are more 
than modestly advertised. Some are never adver- 
tised at all. Upon general principles, I would 
advise you to have nothing to do with a bond 
which is heavily advertised. A good bond does 
not need much publicity. 

Remember that this book is not intended for 
speculators, or for financial gamblers, men who 
play with stocks and bonds as they do with cards, 
to win or lose at the casting of the dice. I am 
presenting facts and opinions, which I hope will 
[125] 



How to Save Money 

be of service to the rank and file of men and 
women of the great middle class, to the many 
thousands who have small incomes, and cannot 
save, therefore, more than moderate sums, and 
who should consider security of more consequence 
than a high rate of interest. 

I do not propose to compare the good bond 
with the savings bank, because the first-class sav- 
ings bank offers as substantial security as the 
bond does, although the high-grade or gilt-edged 
bond is safer than the average savings bank 
account. Both the good bond and the thoroughly 
secure savings bank pay about the same rate of 
interest, and offer practically the same security. 
It is largely a question of preference. I would 
advise the small investor to use both. 



[120] 



Bank Stock 

CHAPTER XV 

BANK STOCK 

NATIONAL bank stocks or shares are con- 
sidered high-class securities, their value 
being based upon the capital of the bank itself, 
the quality and quantity of the business done, 
and, further, upon the reliability and financial 
standing of the directors and officers. 

National banks fail, but not often; and com- 
paratively few which are officered by men of money 
and high standing meet with more than temporary 
embarrassment. 

The stock of the conservative, and yet progres- 
sive and well managed national bank, may be 
considered as giving pretty close to the maximum 
of safety. Yet it is subject to some fluctuations, 
and the holder of it cannot depend upon its value 
remaining at any one price. But these fluctua- 
tions are usually quite small, the stock remaining, 
as a rule, at its standard valuation. If it drops, 
the decline is likely to be momentary, with a 
quick return to the normal. 

The purchaser of national bank shares should 
bear in mind that he is personally liable for twice 
the amount of his stock, should the bank suffer 
[ 127 1 



How to Save Money 

financial embarrassment and not be able to meet 
its obligations. For example, let us suppose that 
jou own one share of national bank stock, the 
par value of which is one hundred dollars. The 
bank fails, and there is not sufficient money to 
pay its depositors. A depositor is a preferred 
creditor, and he must be paid before any one else 
receives his money. Therefore, you, as a stock- 
holder, may be assessed as much as the par value 
of your stock, in which case your loss would be 
one hundred dollars plus what you paid for the 
stock. 

Many a small investor has been ruined because 
of the failure of the national bank in which he is 
a stockholder. 

This condition adds additional risk to national 
bank stock, yet it is comparatively small as a 
matter of fact, because most national banks are 
strong financially. 

Before purchasing national bank stock it is 
well to investigate the standing of the bank, and 
to ascertain the market or selling value of the 
shares for the last ten to twenty years. If the 
stock has shown much fluctuation, better let it 
alone. Then, you should consult, personally or by 
mail, the officers of other banks and men of high 
financial reputation, who are in a position to 
know about the bank in question, or can easily 
[128] 



Bank Stock 

ascertain for you various facts relative to its stand- 
ing. 

Unless several reliable bank officials, or other 
recognized financiers, will unqualifiedly recom- 
mend the stock, you had better consider some 
other form of investment. 

The national bank is a public institution. If 
it is solid, and doing a good business, its posi- 
tion in the financial world is well known, and you 
will have little difficulty in getting at the facts. 

If, on the other hand, you experience difficulty 
in finding out about it, the chances are that there 
is something wrong about the bank. 

Comparatively few national bank stocks sell at 
par, and the premium may run to many times the 
face value of the stock, the size of the premium 
depending upon the reliability of the bank, its 
capitalization, and the interest paid. 

The share-holder is not likely to receive more 
than five or six per cent for his investment, even 
though the bank may pay double or treble that 
sum on the par value of its stock. 

The stock of a first-class national bank never 
sells at par, and there are instances where it is 
worth thirty times its face value. 

Never buy a bank stock selling for less than 
par. It may be safe, but not for you. 

As a matter of fact, good national bank stock 
[ 129] 



How to Save Money 

is not likely to be a much better paying invest- 
ment than is a deposit in a good savings bank or 
a good municipal bond. 

While I have every respect for good national 
bank stock, I do not especially recommend it to 
wage-earners, because it is preeminently an 
investment for men of money, is somewhat subject 
to fluctuation, carries with it a liability, and 
does not pay much more interest than that given 
by savings banks, where the deposit is not subject 
to fluctuation, and where the depositor has no 
responsibility. The security offered, however, by 
a good national bank, is very much above that 
given to the depositors of many savings banks, 
which are virtually controlled by one man, and 
which are too small to stand defalcation or loss. 

When I refer to good savings banks, I have in 
mind only those controlled by several men of high 
standing, and carrying so much money that 
it would be extremely difficult for them to be 
affected by dishonesty or other disaster. 

I need not discuss the stock of the state bank 
and loan and trust company. What I have said 
about national bank stock applies virtually to 
that of other banking iustitutions. 

The reader is referred to the chapter entitled 
" Keeping a Bank Account " for further informa- 
tion about business banks. 

r 130 1 



Investment Value of Stocks 

CHAPTER XVI 

THE INVESTMENT VALUE OF STOCKS 

I HAVE attempted to cover in other chapters 
the various kinds of stocks, and I have dealt 
particularly upon the speculative side of stock 
buying. In this chapter I shall try to treat, 
briefly, stocks as an investment for the man of 
small income, the salary-receiver, and the wage- 
earner, without any attempt to consider them for 
the speculator and capitalist. 

It is obvious that the man of little present 
money, and with small prospect of accumulating 
more than a moderate sum, should consider safety 
and security of far more importance than the 
large profit which may be realized by the taking 
of more than ordinary chances and by specula- 
tion. 

A share of stock may be untechnically described 
as a piece of paper representing a proportionate 
part of the ownership of a corporation ; for 
example, if a company is incorporated for one 
hundred thousand dollars, and issues one thou- 
sand shares at one hundred dollars each, the 
holder of one share owns one one- thousandth part 
of the corporation and the property held by the 
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How to Save Money 

corporation. The holding of this share entitles 
its owner to one vote; if he holds two shares, he 
has two votes. 

The real or permanent value, but, unfor- 
tunately, not always the selling price, of stock is 
dependent wholly upon the assets of the corpora- 
tion and its present or prospective profits. 
Practically all corporations are controlled by one 
man, or by a few men, and the small stockholder 
has little or no voice in the management. The 
majority of stock controls, and a majority vote 
of the stock itself, not of the stockholders, elects 
the directors, frames the policy of action, and 
virtually handles the situation. 

Let us suppose, for example, that there are 
forty stockholders, holding one thousand shares 
altogether, but that one man holds five hundred 
and one of the shares ; he is practically manager 
of the company, and may do as he pleases with it, 
provided he does not permit provable irregular- 
ities under the law. 

The minority stockholders have rights, but it 
is exceedingly difficult for them to exercise them. 
The stockholders in control may do as they 
please to an almost unlimited extent. 

As a matter of fact, comparatively few corpo- 
rations are other than partnerships, the stock- 
holders, except those holding a majority of the 
[ 132] 



Investment Value of Stocks 

stock, are less in control than silent partners are, 
and usually have less power and fewer rights. 
Large enterprises, and even small ones, are incor- 
porated, because by so doing, the owners escape, 
as a rule, personal liability and responsibility; 
and because it is easier to sell stock, and thereby 
obtain outside capital, than it is to raise money 
under a partnership. 

Practically all corporation stock is subject to 
fluctuation, although the best stocks seldom move 
more than a few points up or down. Stock may 
pay any rate of interest, or none at all, and it 
may be purchased for ten cents on a dollar, or 
less, or for many times its face value. If it pays 
a dividend exceeding six per cent, and the cor- 
poration is well managed and has large assets, it 
is not likely to sell at par, and it may be worth 
twenty or thirty times more than its par value, 
although comparatively few stocks sell for more 
than double their face value. A stock paying, 
say, twelve per cent, may sell in the market for 
twice its par value. This would mean that its 
purchaser would realize but six per cent. No 
share of solid, legitimate stock, paying a good 
rate of interest, is likely to be obtainable at a 
price which would allow a net dividend exceed- 
ing six or seven per cent. 

As the share of stock represents ownership and 
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Hoic to Save Money 

management, and is not a mortgage lien upon the 
property, it does not have the intrinsic value of a 
bond ; nor does it give the same security. It pays 
a larger rate of interest, because its value is more 
speculative, and its ovvner takes a larger risk 
than does the holder of a bond. 

Preferred stock may be described as that holding 
a preference over common stock. Should the cor- 
poration fail or liquidate, the bond-holders, and 
those having mortgage or other liens upon the 
property, are paid first. Then come the pre- 
ferred stockholders, then the owners of the com- 
mon stock. Preferred stock may and may not 
have a higher intrinsic value than that of common 
stock, and it may sell for less. If the common 
stock is paying a large dividend, it will bring very 
much more than preferred stock will, but if the 
company is suffering from disaster or financial 
weakness preferred stock offers greater security. 

The interest on the preferred stock cannot be 
over the amount specified upon its face, even 
though the common stock may be paying ten times 
as large a dividend. If the company is not doing 
a good business, it cannot pay, of course, the full 
rate of interest guaranteed to the preferred 
stockholders. They are not sure of receiving the 
interest agreed upon, but they are sure of not 
receiving more than the interest agreed upon. 
[131] 



Investment Value of Stocks 

The full amount of interest specified on the 
preferred stock must be paid before the common 
stockholders receive any dividend. 

Would I advise the man with a small income 
to consider either preferred or common stock as 
an investment? I do not feel justified in answer- 
ing by an enthusiastic " yes," or by an emphatic 
" no." 

Stock buying, selling, and holding belong 
rightly to men of money, to professional financiers, 
and to those who can afford to take more or less 
speculative chances. It is obvious that the aver- 
age salary-receiver, and that all wage-earners, 
are not in a position to take more than the very 
minimum of risk, nor can they afford to invest 
their money, as a rule, in anything which is likely 
to fluctuate in value. I would not advise them, 
necessarily, against holding a few shares of gilt- 
edged stock, of standard stock, of stock which is 
more likely to go up than to go down, of stock 
which cannot under other than extraordinary 
conditions drop more than a few points. Such 
stock exists, but it cannot often be purchased so 
as to pay exceeding six per cent. 

Unless one is thoroughly familiar with the 

stock market, or has conservative friends who are 

investors rather than speculators, to whom he 

can go for advice, he had better let stocks severely 

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Hotc to Save Money 

alone, partly because the security offered is not 
likely to be as good as that presented by the strong 
savings bank and the solid bond; and, further, 
because when one begins to buy stocks he is likely 
to become infatuated with what may be called a 
sport, and this tendency, which frequently becomes 
chronic, usually results in disaster. 

The reader is requested to study the other chap- 
ters on stocks, especially the one entitled " Specu- 
lating in Stocks." 



[ 156 



Speculating in Stocks 

CHAPTER XVII 

SPECULATING IN STOCKS 

WHILE the element of luck, or chance, or 
speculation, accompanies all business- 
doing, and cannot avoid being a component part of 
every investment, and of everything which repre- 
sents value, the so-called stock speculator operates 
along lines diametrically opposite to those usually 
employed by the ordinary business man, and to 
those necessary to the conduct of regular business, 
like the manufacturing and selling of commodities. 

The action of business, and the principle of 
conducting it, are either based, or supposed to be 
based, upon the making and distributing of 
intrinsic values, things which may be measured 
or weighed. 

Stocks may have, or should have, a definite 
value; yet many of them are purely speculative, 
selling high to-day and low to-morrow, and the 
owner of them may, at no time, have more than a 
small equity in what he owns or thinks he owns. 

The commodity or general merchandise may 
be subject to the fluctuations of the market, but 
its value usually remains the same, or about the 
same, except under unusual conditions. 
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How to Save Money 

The stock may and may not have intrinsic value. 
Its selling price is often problematic. It is likely 
to sell for more than it is worth to-day, and less 
than it is worth to-morrow; and, if it is worth 
nothing, it is by no means impossible to sell it for 
something, if it is held by those who know how to 
manipulate it; but the small investor is never in 
that class. 

If the corporation has a negotiable asset equal 
to its stock issue, and this asset is likely to remain 
permanent, then each share of stock has a defi- 
nite value, subject to minor fluctuations; but if 
the stock represents " water," and has only an 
inflated value, or is part real and part "water," 
then it can have no standard price and little basis 
of actual valuation. Even the best of stocks are 
subject to fluctuations, caused, not necessarily 
by a shrinkage in the actual valuation, or because 
of increased or decreased business, but because a 
syndicate of underwriters and manipulators are 
playing a game with them, with the public on the 
other side; and in this contest, the public seldom 
wins. For example, a railroad has certain nego- 
tiable assets, consisting of its right-of-way, its 
rolling-stock, its real estate, and the business it 
is doing. Its stock, therefore, unless there be a 
flood of business or a general depression in busi- 
ness, should be worth the same to-day as it was 
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Speculating in Stocks 

yesterday, and yet it may go up or down a few 
points in twenty-four hours. If it goes down, 
the owner of it loses money, unless it soon goes 
up again or he can aiford to carry it. The reg- 
ular commodities and merchandise are influenced 
also by financial movements, but are not as sen- 
sitive as stocks are, and are subject to less fluctua- 
tion. 

The trading in stocks which represent intrinsic 
values is a thoroughly legitimate business, and 
there is no business reason why it should not be 
carried on by men who understand it. 

The stock market is preeminently the exclusive 
arena for those who enjoy fighting, and who know 
how to fight, who laugh at success and who smile 
at failure; but it is not for the outsider, and the 
so-called tenderfoot. It is easier for him to walk 
on the red hot pricks of trade than it is for him 
to travel through the mazes of the stock market. 

Stock buying and selling is a business in itself. 
Success depends upon a thorough knowledge of 
the situation, but even the closest familiarity with 
the business may avail for nought in the long run. 
A large proportion of stock manipulators, and 
dealers in stocks, even of the better class, may be 
completely swamped by the rise and fall of the 
market. They were rich yesterday, and are poor 
to-day. 

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How to Save Money 

The great highway of life is lined on both sides 
with former inmates of the stock exchange, men 
who once travelled by automobile, and are now 
either dead or are crawling into obscurity. 

The stock market, from the curb to the legiti- 
mate exchange, is the cause of more failures than 
can be laid against any dozen other business fac- 
tors put together. 

The majority of small investors keep away, or 
are kept away, from standard stocks. They in- 
habit bucket-shops, and surround the offices of 
low-class brokers, who sell less-than-nothing, noth- 
ing, or almost nothing, for something. The very 
atmosphere of the bucket-shop, like that of the 
gambling-den, attracts them and holds them. 
They are intoxicated with greed. They care 
nothing for honor, or for anything else in their 
mad rush to get rich mighty quick. They are 
gamblers, neither more nor less. 

The bucket-shop is, generally defined, a bro- 
kerage institution, where all kinds of stocks, — 
good, bad, and worse, usually the last, — are sold 
on illegitimate margin, the purchaser seldom hav- 
ing any tangible equity, and often no ownership 
in what he thinks he has purchased. 

The bucket-shop proprietor plays to win, 
plays his customer to lose, and he always plays 
with loaded stocks as he would play with loaded 
[ 140] 



Speculating in Stocks 

dice. Occasionally the customer is permitted to 
win, that the bucket-shop proprietor may fleece 
him in the end. 

Bucket-shops are usually handsomely fur- 
nished and made extremely attractive to their cus- 
tomers, who are offered every superficial courtesy, 
even to free letter-paper, telephone, and postage 
stamps. 

Hundreds of thousands of men, and thousands 
of women, owe their downfall to speculation in 
stocks, and most of them have reached the pit of 
despair through the open way of the bucket-shop. 
They know nothing about stock values, and they 
buy them as they would match pennies, virtually 
staking their money upon the turn of the fraud- 
ulent wheel of fortune. If they win, luck or ac- 
cident is responsible for it. If they lose, they 
receive their deserts. Where one small investor 
wins at stock gambling, or at stock buying, a 
hundred lose, and practically all of them go down 
in the end. 

The mania for stock gambling (I put it this 
way instead of calling it speculation) is as fatal 
as is that which makes a man a slave to liquor 
or opium. It gets a grip upon him to his cer- 
tain ruination. It becomes a chronic disease. It 
is infectious and epidemic. 

No one can afford to dabble in stocks in a 
[141] 



How to Save Money 

speculative way, either through the bucket-shops 
or the regular exchange, or to buy high-grade 
stocks or those of questionable value, unless he is 
financially able to stand many and frequent losses, 
and has the mental capacity to look disaster in 
the face without flinching; and, further, is so 
situated that his downfall will not affect others 
who are innocent. He must take chances such as 
a man of moderate means has no moral or other 
right to take. 

Stock speculation for the man of small income, 
or for the rich man of inexperience, is as far re- 
moved from the legitimate and careful investment 
as the cold of the North is distant from the heat 
of the Equator. 

I have heard that there are, located in some 
mysterious somewhere, a few small investors who 
have successfully played the game of specula- 
tion, who have won by luck, and yet had sense 
enough to pocket their profits and stop at the 
right time; but I am bound to say that I have 
never been permitted to rest my eyes upon one 
of these speculative wonders, and I never have 
been face to face with any one who has seen any 
one of them or could give me his address. 

There is an immutable law which makes it well- 
nigh impossible for the gambler either to save, 
or to continuously win, or to come out more than 
[ 142 ] 



Speculating in Stocks 

whole, at best. But even if he could break even, 
and make a fair profit, I would protest against 
any form of stock gambling, or any kind of stock 
speculation, for the man of small income: 

First, because it is morally wrong for him, 
anyway, whether or not it be right for the man 
of money. 

Secondly, because every form of gambling, in- 
cluding speculation, leads to financial degrada- 
tion and is responsible for a large part of our 
business dishonor, and for premature failure and 
disaster. 

Thirdly, because no man of little money, with 
a family dependent upon him, or even one with- 
out dependents, can afford to take speculative 
chances. To do so discounts his present and 
mortgages his future. 

I have never known a speculator, even one of 
pronounced success, to recommend speculation, 
certainly not to the salary-receiver and wage- 
earner. He would no more think of giving this 
advice than would the opium fiend advocate the 
opium habit. 

To take more than fair chances, to enter into 
speculation, if one has only a moderate income 
and has a family, is as criminally wrong as it 
is to rob the cash-drawer. 

I am speaking emphatically, because I realize 
[143] 



How to Save Money 

the danger, and because I know what I am talk- 
ing about. 

I would advise the small investor, the man of 
family, unless he be wealthy, the salary-receiver, 
the wage-earner, and the average man, to shun 
the stock market, and particularly the bucket- 
shop side of it, as he would the plague. I would 
even go so far as to advise him never to invest 
his money in fluctuating stocks, even if he is 
reasonably sure of winning, because the glory of 
the initial victory may lead him on to financial 
disaster. 

Many a small investor goes into stock buying 
because he has received that peculiar something, 
or that indescribable nothing, which is know as 
a " tip." Ninety-nine and nine-tenths of the so- 
called " tips " are intentionally misleading. Peo- 
ple who have " tips " good for anything, usually 
have brains enough to keep them to themselves. 
Most of the " tips " have strings tied to them, 
and hooks inside of them. They are usually baits 
cast, not by fishers of fish, not by fishers of men, 
but plain, every-day catchers of that peculiar 
wiggling and irresponsible form of life known on 
the street under the very appropriate and signifi- 
cant title of " suckers." 

When you have a little money, and do not know 

[ 144 ] 



Speculating in Stocks 

what to do with it, do not speculate with it. 
Better stick to the old-fashioned stocking, which 
has but one hole, and that an entrance, or to the 
pantry sugar bowl, which does not spill its con- 
tents if it is kept right side up. 



[ 145] 



How to Save Money 

CHAPTER XVIII 

BUYING STOCKS ON MARGIN 

STOCKS are purchased by payments in full, or 
by substantial partial payments, or they are 
bought, or apparently so, on what is commer- 
cially known as " margin." 

While a " margin " is virtually a partial 
payment, it is appropriately called a " margin," 
because of its smallness. 

A first-class or reputable broker is not supposed 
to sell on " margin," except under special con- 
ditions, and even then he is not likely to receive 
less than a very substantial payment on account. 
An unreliable, disreputable, and usually thor- 
oughly dishonest, broker or dealer in stocks al- 
most invariably sells on small " margin," and in 
comparatively few of his transactions is there a 
payment in full, or a payment anywhere near to 
the selling price of the stock. 

The usual " margin " is as low as is conducive 
to the broker's, not the investor's, safety, the for- 
mer requiring a payment just large enough to 
cover any probable depression in the market or 
selling price of the stock. 

The bucket-shop proprietor and margin-man 
[ 146 ] 



Buying Stocks on Margin 

invariably deal to win, and never use their own 
money in the play. Their customers are usually 
small investors, — the " lambs " in the street, — 
who possess neither financial knowledge, nor much 
of any other kind, victims of acute avarice, fool- 
ish moths who fly about the speculative lamp, oc- 
casionally, and usually by accident, keeping out 
of the flame, but always getting burned in the end. 

The usual " margin " required by the broker 
is about ten per cent of the real or imaginary 
market value of the stock. For example, if the 
probable selling price of the stock is ten dollars 
per share, the broker demands a deposit of one 
dollar, for which he will purchase the stock or 
pretend to do so, and either carry it or claim to 
carry it for his customer. If the stock goes up, 
say, to twelve dollars, the broker will, or will say 
that he will, upon the customer's request, sell the 
stock and give the customer three dollars, less 
his commission; but in ninety-nine cases out of 
a hundred, the broker will so play upon the lack 
of judgment of his customer that the customer 
will reinvest his profits on " margin." If the 
stock goes down, say, to eight dollars, then the 
customer has lost the dollar which he deposited, 
and must pay the broker another dollar, or lose 
his stock. 

Most of the stock supposed to have been 
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How to Save Money 

purchased on " margin " is never really bought at 
all. The broker carries the transaction on paper. 
If the customer loses, he demands further pay- 
ment. If the customer wins, he does his best to 
keep him from taking his profits, and suggests 
reinvesting, and so on to the end of the customer. 

Margin-buyers are virtually gamblers on paper, 
and their profits may remain on paper, but their 
losses are real. 

Theoretically it would appear that the pur- 
chase of stocks on " margin " is not inconsistent 
with good business principles. If it is, then it 
might be claimed consistently that the buying of 
real estate upon mortgage, or incurring any kind 
of indebtedness, should be discouraged, and that 
we should fall back upon the old-fashioned notion 
that no one has a right to anything which he can- 
not fully pay for in cash or its equivalent. But 
fortunately or unfortunately, getting into debt 
has become, by custom, a legitimate part of busi- 
ness-doing. 

Comparatively few business men, whether spec- 
ulators or not, pay in full for what they receive 
when they receive it. Some of them believe that 
running an account or getting trusted is better 
business policy than to make full payments in- 
variably in cash. Let us suppose, for example, 
that a man can purchase goods, either on long 
[148] 



Buying Stocks on Margin 

credit or by a payment of from twenty-five to 
fifty per cent of the face of the bill, and that a 
full cash payment would not save him more than 
two per cent. This is considered good business, 
provided the man has solid assets, and can, if 
he will, meet the indebtedness, and, further, pro- 
vided that the use of ready money is worth more 
to him than the discount he would receive for 
cash. 

Getting into debt is, therefore, perfectly legit- 
imate, or has been made so by custom. If it is 
not overused, it is not to be condemned generally, 
for most of the harm in it is due to the degree 
of it and not to the action itself. 

Indebtedness may be both a business virtue and 
a business curse. 

The right proportion of indebtedness is not 
dishonest, but too much of it is positively dan- 
gerous, runs clear up to the line of failure, and 
is often the basis of criminal dishonesty. 

Do not misunderstand me, and do not think 
that I am encouraging debt of any kind, except 
where it pays to get into debt. No one has a 
right to purchase anything which he is not rea- 
sonably sure of being able to pay for. If he 
runs into debt he should have business reasons 
for so ' doing, — reasons of expediency, not of 
probable inability to make good. To incur any 
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How to Save Money 

other than a safe indebtedness is not only dis- 
honest, but works injury to the doer, perhaps 
not at first, but his downfall is certain in the 
end. 

Common business indebtedness, — the raising 
of money upon mortgage or other security, — is 
in principle and in fact diametrically different 
from buying stock on " margin." It is difficult 
to explain this, for theoretically they are alike, 
but practically they are far removed from each 
other, particularly in result. 

Comparatively few careful borrowers meet with 
disaster on account of the transaction, while 
practically every buj^er of stock on " margin " 
is either a heavy loser or finds himself wiped off 
of the financial slate. In this particular case, 
may we not judge the action by the result, and 
not attempt to analyse too minutely the compo- 
nent parts of the transaction itself. 

Most emphatically I would advise the small in- 
vestor to refuse absolutely to purchase stocks of 
any kind on any size of " margin," even on safe 
" margin." It is better for him, as a matter of 
principle and for safety, to make full payment 
for the stock he buys, or not to buy it at all. 
True, a " margin " may be safe to the man who 
understands the market, assuming that any one 
really knows it, but the " margin " practice is 
[150] 



Buying Stocks on Margin 

decidedly risky and is the cause of most of the 
financial downfalls of small' speculators. 

The bucket-shop or margin-broker is dishon- 
est because he is breaking both a written and an 
unwritten but firmly established financial law. 
If he is dishonest he cannot be trusted, and if he 
cannot be trusted, he should not be patronized. 

It is never safe to deal with a swindler, whether 
you are buying stocks or horses. Even if you 
know stocks and horses, he will get the better of 
you sooner or later, unless you are a swindler 
yourself, and then you will take turns with him, 
each alternately getting the better of the other. 

The stock gambler and small investor patron- 
ize the bucket-shop or margin-shop because there 
the dollar appears to go further than it would 
with a legitimate broker. The bucket-shop or mar- 
gin-man cares nothing for the customer, in fact 
his customer's loss is likely to be his gain. He 
would not be successful if his customer's inter- 
est received any real attention other than the en- 
couragement which draws the customer deeper 
into the mire. He encourages the sale of stocks 
on " margin," and will take the smallest " mar- 
gin " consistent with safety to himself. 

Many of these so-called brokers never purchase 
any stock, except when forced to make good, and 
it often requires threats of arrest to compel them 
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How to Save Money 

to meet their obligations. Their dealings are 
often wholly on paper, and the customer has, at 
best, mere gambling chances. 

The customer is always at a disadvantage, for 
the broker invariably deals to win, and he wins 
anyway, whether or not his customer loses. 

Buying stocks on " margin " is not only pure 
and simple gambling, but it is more dishonest 
than gambling, because the gambler's pot may 
contain some tangible property, while the mar- 
gin-gambler usually plays upon paper, with small 
actual chance of collecting his winnings, if he 
should appear to win, and with the absolute cer- 
tainty of being obliged to pay his losses. 

More men have been ruined by buying stocks 
on " margin " than in any other direction, and 
the practice is to be condemned without even a 
suggestion of qualification. Where one margin- 
dealer makes a dollar, thousands lose ten dollars, 
and all of them eventually go to pieces. The 
stock gambler, and particularly he who purchases 
stocks on " margin," takes more desperate chances 
than does the buyer of lottery tickets or the 
better on horse races. The lottery ticket usu- 
ally represents an opportunity, although a very 
small one, of getting something, and some of the 
horse-race gamblers have to win; but statistics 

[152] 



I 



Buying Stocks on Margin 

show conclusively that the small investor is ab- 
solutely sure of losing in the end if he buys stocks 
on " margin " or attempts to get rich by specu- 
lating in stocks. 

In many States bucket-shops are prohibited by 
law, but one may gamble in stocks, if he will, 
without the aid of the bucket-shop, and without 
buying stocks on " margin." The small investor 
or man of low income has no business to dabble 
in stocks, whether he buys them outright or on 
" margin," unless he is willing to take unfair 
chances, and to assume the very maximum of 
risk, and is foolish enough to be willing to 
stake his all on the prospect of doubling his 
money. 

He may possibly make money for a time by 
speculating in stocks. Even if he takes ninety- 
nine chances out of one hundred he may occasion- 
ally win, and sometimes luck seems to be with him, 
and he is able to trump every transaction; but 
experience shows, beyond a doubt, that the small 
investor invariably loses sooner or later, usually 
sooner. True, he should have sense enough to 
stop after he has made some success, but he does 
not stop; for the man of small income, who is 
foolish enough to speculate, has usually not brains 
enough to be satisfied with any moderate degree 

[153] 



How to Save Money 

of profit, and is pretty sure to remain in the 
game until everything he has staked is gone. 

Unless he understands the stock market, the 
farther he keeps away from it, the better off 
he is. 

The bucket- or margin-shop is one of the most 
largely patronized gates to financial hell. 



[ 154] 



Industrial Stock 

CHAPTER XIX 

INDUSTRIAL STOCK 

INDUSTRIAL stock is a share in the prop- 
erty, good-will, and profits of a private cor- 
poration doing business under a charter issued 
to it by the State, without interference from any 
national or state law other than that which ap- 
plies to corporations in general. It does not hold 
or operate under a franchise, has no eminent do- 
main rights, and cannot use any property, unless 
it owns or leases it. 

The private corporation is, in fact, a partner- 
ship for the doing of business, except that the 
ownership is vested in the share-holders, or stock- 
holders. 

During the last few years the incorporation of 
private business enterprises has become almost 
epidemic. Many a corner grocery store, and 
drug shop, are incorporated, although they may 
be doing a very moderate business. Formerly 
there were comparatively few private corpora- 
tions other than those representing vast interests. 
Then, practically all business was done under co- 
partnership. 

The practical diiference between a corporation 
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How to Save Money 

and a co-partnership is largely that the liability 
of the owners is limited in the former and less 
limited in the latter. Under common law, all co- 
partners are liable for each other's acts, and this 
liability may extend to personal property; while 
in a corporation, the stockholders or owners have 
no liability beyond their stock and the corpora- 
tion property itself, except, sometimes, they may 
be held for a result of negligence. The owner- 
ship of a corporation is easily transferable, in 
whole or in part, much more so than it is in a 
co-partnership. 

Industrial stock, then, simply represents a 
share in the ownership of a corporation doing 
business similar to that done under co-partner- 
ship, and is not a public service company, like 
those owning or controlling railroads, trolleys, 
gas, water, and electric light. For example, a 
firm of shoemakers desires to incorporate its 
business instead of continuing under a co-part- 
nership. The company capitalizes at one hun- 
dred thousand dollars, issuing one thousand shares 
of stock at a par value of one hundred dollars 
each. In all probability one man, or a few men, 
will retain as many as five hundred and one shares, 
and will control the business, the minority of the 
stockholders having comparatively few rights 
against the majority, unless it transgresses the 
[156] 



Industrial Stock 

law. Four hundred and ninety-nine, or a less 
number, of shares of stock are offered for sale, or a 
part of them may be held in the treasury, to be 
sold later on, if it seems advisable to part with 
it. The stock of the company, other than the 
treasury stock, belongs to the individual holder 
of it, and not to the company, and he may or may 
not turn the receipts of its sale into the busi- 
ness, but the money coming from the sale of 
treasury stock cannot rightly be used for other 
than for the conduct or development of the busi- 
ness. But as the management is likely to be 
wholly in the hands of the majority of the stock- 
holders, it is not at all difficult for the receipts 
coming from the treasury stock eventually to 
reach the pockets of the majority stockholders, 
and be of little benefit to the business, provided, 
of course, that the company is controlled by dis- 
honest men and speculators. 

Many private corporations issue what is known 
as preferred stock, as well as common stock. The 
preferred stock carries with it a real or apparent 
guarantee to pay a specified dividend, and is not 
allowed to pay any more, even if the business 
yields an enormous profit. Occasionally the 
company earns as high as thirty to fifty per cent, 
or even more, on its common stock, yet does not 
pay more than six to ten per cent on its pre- 
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How to Save Money 

ferred stock. (See description of preferred stock 
in the chapter entitled " The Investment Value 
of Stocks." ) 

During the last few years enormous quantities 
of industrial stock have been presented, and at 
times, fairly dumped upon the unsuspecting pub- 
lic. The newspapers have been filled with pages 
of advertising, most of which is printed in 
the brightest colors, over-burdened with sense- 
jarring adjectives, offering unparalleled and 
unprecedented opportunities of getting-rich- 
mighty-quick at hardly the suggestion of the mini- 
mum of cost. 

The foregoing statements, though true, must 
not be construed to mean that all industrial stocks 
are other than sound and do not represent tan- 
gible property and probable dividends. The 
very nature of the law permitting the incorpora- 
tion of private enterprises offers unusual oppor- 
tunity for fraud, and gives, I believe, the largest 
market place for the successful sale of worthless, 
or next to worthless, stock. It enables men to 
swindle each other legally, and offers a premium 
on fraud and misrepresentation. Undoubtedly, 
it can be regulated, but not wholly controlled, by 
law. So long as lambs are born, there will be 
wolves to feed upon them. 

The practical advantage of an industrial stock 
[158] 



Industrial Stock 

as an investment, is that it is likely to pay a 
larger dividend than can possibly come from a 
sound and safe bond or other equally solid se- 
curity. Some industrial stocks pay as much as 
ten per cent, and even fifty to one hundred per 
cent is not impossible, although comparatively 
few safe industrial stocks are likely to bring more 
than six to eight per cent, at the outside, except 
during " spurt years." 

It is obvious that few good industrial stocks, 
heavily secured with property, would be sold at 
par, if they are paying more than a good rate 
of interest. 

The average industrial stock does not pay an 
even dividend. It is likely to be high one year 
and low the next. It is subject to tremendous 
fluctuations, but the best industrial stock seldom 
pays less than six or seven per cent net on its 
selling price. 

The disadvantages of industrial stock as an 
investment are: 

First, it is likel}^ to be subject to great fluctua- 
tion. The business may show large profits one 
year, and a loss the next. 

Secondly, a change of management in the busi- 
ness may occur at any time. Bad management 
may lower the profits or break the business. 

Thirdly, all private corporations, barring a 
[159] 



How to S-ave Money 

few illegal trusts, are subject to competition, and 
this competition may cripple or ruin the com- 
pany. 

Fourthly, comparatively few industrial com- 
panies own properties equal in intrinsic value to 
the amount of the stock issued, although in some 
cases the properties cost as much or more. 

Fifthly, even well-equipped and modem fac- 
tories will seldom bring what they cost when sold 
under the hammer. A broken business cannot 
often be mended to its original condition. 

Sixthly, industrial corporations are usually 
controlled by one man, or a few men, and the 
death or disability of these men, or any dishonest 
practice on their part, is likely either to break 
the company or to materially affect the value of 
its stock. 

Scattered over the country are hundreds of 
thousands of manufacturing and other concerns, 
which are loading their stock upon the public, 
giving the buyers practically no security, and 
very little prospect of receiving any dividends, 
save the first one, which may be paid for bait. 
Many of these corporations are officered by 
speculators, who manipulate them to their own 
advantage and to the customer's loss. They con- 
trol the majority of the stock, although most of 
the money has come from the minority stockhold- 
[ 160 ] 



Industrial Stock 

ers. Of course, minority stockholders have 
rights, but it is extremely difficult to get them, 
as the owners of the majority of the stock are 
usually able to override any protest from the 
minority. 

I would not advise men of small means, or with 
moderate incomes, to give the preference to 
investment in industrial stocks. As a rule, I 
would most emphatically warn them against pur- 
chasing the stock of any industrial company which 
does not stand high in trade, which is not con- 
servatively managed, and which is not recom- 
mended by high-class business men and bankers. 

Unless the stock will be considered as collateral 
by first-class banking houses, the small investor 
had better have nothing to do with it. 

When one is an employee of an industrial con- 
cern, and is in a position to know the character 
and stability of the house, he may consider the 
advisability of investing a part of his savings in 
the stock of the company which employs him; 
but he should never do this upon the unsupported 
representation of any officer of his company, 
however much he may respect that officer and 
believe in his integrity. It is obvious that an 
interested official is likely to be biassed. If the 
stock is worth buying, several first-class banks 
of deposit will accept it as collateral, and the 
[ 161 ] 



How to Save Money 

security it offers is known to financiers and busi- 
ness men who have no interest in it, except that 
thej hold it as an investment. The mere fact 
that you like your employer does not furnish 
sufficient reason for buying the industrial stock 
he represents. 

Thousands of industrial corporations have 
attempted to unload their stock upon their 
employees, and have appeared to do it as a favor. 
This is adding hypocrisy to dishonesty. 

I again advise the employee to be careful. If 
the stock is worth buying its value is known, and 
no reliable man questions it, and somebody besides 
the officials of the corporation are buying it and 
holding it. 

But no matter how good the stock may be, it 
is inadvisable to place the whole of one's savings 
in any one form of investment. 

By all means, particularly shun industrial 
stocks which are advertised with bombastic 
announcements, and which appear to offer enor- 
mous and unusual interest. 

I believe that practically all heavily and sensa- 
tionally advertised industrial stocks are of ques- 
tionable value, and are, at best, purely speculative ; 
in fact, I feel that most of these companies were 
incorporated with the intention of unloading 
upon the public. Probably the business repre- 
[ 162 ] 



Industrial Stock 

sented is half dead, or dead, the factory old- 
fashioned and unproductive, and the profit purely 
prospective. The business used as a basis for 
issuing the stock may have been profitable at one 
time, although moderate in volume. It has 
simply rusted out. Its past record is used as the 
basis of the advertisements. Its present condition 
is intentionally forgotten, that the advertisement 
may announce what has been done, and may 
, appear to guarantee what will be done. If the 
prospectus is truthful, it tells the truth only in a 
technical way, and makes the story read well b}^ 
the presentation of generalities and pasts, and the 
omission of presents, with zenith-painted pictures 
of futures. 

The stock, then, is likely to have little invest- 
ment value, and may not have even a speculative 
one. 

The majority of first-class industrial stocks 
are sold privately, or with modest newspaper 
advertisements, and the money received is used 
wholly for development purposes. For example, 
a woollen manufacturer has succeeded in building 
up a splendid business. He has every reason to 
believe that he can materially increase his output. 
He can do this in two ways : first, by turning in 
his profits, which will allow him to develop slowly ; 
secondly, he may incorporate his company, or, if 
[163] 



How to Save Money 

incorporated, increase the capital stock. This 
he places on the market in a dignified way, and 
the money received from the sale of the stock he 
uses legitimately for the enlargement of his busi- 
ness. The chances of success are favorable, but 
may not be sufficiently so to suggest that the 
stock be purchased by small investors, or by men 
of moderate income, who had better place their 
money where the security is at the maximum, or 
close to it, — in the savings bank, or by the 
purchase of high-class bonds or mortgages, 
or of other securities which have a definite 
intrinsic value, — which are not subject to more 
than slight fluctuation, and which are not con- 
trolled by any one man or small combination of 
men. 

If I may judge from my own experience (and 
I have personally investigated a very large num- 
ber of industrial stock propositions), I would 
say that I look upon the undue and extravagant 
advertising of an industrial stock as proof positive 
that it is of little or no value, and that it is not 
worth anywhere near what is claimed for it. If 
the company is half as reliable and half as well 
known as the advertisement states, and if the stock 
is worth what is claimed for it, it would appear 
to be easy to raise all the money from, or within, 
the trade represented, or from conservative 
[164] 



Industrial Stock 

speculators, who are willing to take reasonable 
chances. 

So long as money continues to be cheap, and 
there is so much of it, men with good stock to sell 
will address their appeals to men of money, and 
will not go to the great expense of unloading upon 
the general public. 

A fraudulent or questionable stock is heavily 
advertised, because it cannot be sold to people 
who are able to measure and weigh it. It must 
be unloaded upon those who are ignorant of 
values, and who can be coerced into buying any- 
thing which looks well on the face of it. 

With billions of money lying idle, and with 
thousands of capitalists clamoring for investments, 
it would appear to be obvious that owners of a 
hundred-thousand-dollar corporation would not go 
to the expense of putting out from ten to twenty- 
five thousand dollars in advertising, when their 
stock, if worth buying, would be handled at a low 
commission by reputable brokers. 

With the small investor, or man of moderate 
means, who is considering industrial stocks, it is 
simply a question of whether or not he prefers a 
high rate of interest with little security, than a 
low rate of interest with ample security. The fact 
that industrial stock, or other stock for that mat- 
ter, is paying a high dividend must not be con- 

r 165 1 



How to Save Money 

strued as prima facie evidence that; this dividend 
will be continued. Perhaps it is being paid as a 
bait, so as to attract new stockholders. What is 
back of the dividends is all-important. If the 
business is, and has been, successful, if its assets 
are large, if its profits are at least fair, if it is 
so organized that the death or disability of one 
or a few men will not injure it, if it makes and 
sells a commodity of presumably permanent 
demand, then the small investor may favorably 
consider its stock, although I would advise him 
to give something more solid his preference. 

All business is uncertain, especially private 
business, and no one can guarantee the intrinsic 
value, or dividend-paying ability, of any indus- 
trial stock. 

I am not uncompromisingly advising the small 
investor against good industrial stocks, but I am 
simply suggesting to him that there are other 
forms of investment offering greater security, 
although at a lower rate of interest. 

The large investor, or the man of much money, 
finds in good industrial stocks a particular and 
available opportunity for both investment and 
speculation, but this book is not directed to him. 
When one becomes wealthy, and can afford to 
take speculative chances or losses, one is in a 
position to consider many forms of investment 
[166] 



Industrial Stock 

which are not safe for the man of small income 
to purchase. 

Good industrial stocks are thoroughly legiti- 
mate, and. they are far removed from fraudulent 
propositions. 

In connection with this chapter, however, I 
would ask the reader to study the one entitled 
" Fake Investments," not because industrial stock 
is fraudulent, or even questionable, but because 
nearly every form of fake investment and oppor- 
tunity to lose money is some kind of industrial 
stock, including the always-lose-your-money-quick 
mining scheme, which frequently does not repre- 
sent as much as a hole in the ground. 



[167] 



How to Save Money 

CHAPTER XX 

THE REAL ESTATE MORTGAGE 

THE mortgage on real estate is, and always 
has been, considered one of the safest and 
basic forms of investment, and is used by every 
class of investors and money-savers, except those 
who can accumulate but a few hundred dollars. 
A chattel mortgage is a different affair, and is a 
lien upon personal property, such as furniture, 
carriages, and clothing. 

A mortgage may be untechnically described as 
a, sort of bill of sale from the mortgagor to the 
mortgagee, but it differs from the ordinary bill 
of sale in that the mortgagee's right of posses- 
sion does not mature until the expiration of the 
mortgage, provided the interest is paid as agreed 
upon, and the mortgagor gets back his property 
unincumbered by returning the money loaned by 
the mortgagee on the date of the expiration of 
the mortgage, or before, if the mortgagee will 
accept it. 

Although a mortgage is, in the eyes of the law, 

a virtual sale or transfer, both the mortgagee 

and mortgagor are protected each against the 

other, — the mortgagee, because of the security 

[ 168 ] 



The Real Estate Mortgage 

offered; and the mortgagor, because the sale or 
actual transfer of his property remains inactive 
if he pays the interest regularly and the prin- 
cipal at maturity. 

The property mortgaged, although in a sense 
transferred to the lender, is, in practical fact, 
merely held as security by the mortgagee, who 
cannot dispose of it, nor remove nor interfere 
with any part of it, except as specified in the 
mortgage paper, nor has he any other rights so 
long as the conditions of the mortgage are lived 
up to. 

The mortgagor may use the property as though 
he owned it free and clear, subject only to inter- 
ference on the part of the mortgagee if he abuses, 
alters, or does anything which will materially les- 
sen the value of the property. 

A mortgage on a piece of property is as good 
as the real estate is, and even better, unless the 
mortgage covers the full value of the property or 
is in excess of it. 

The mortgagee's rights come before the 
owner's rights. 

If the property is worth more than the face of 
the mortgage (sufficiently more to provide for 
depreciation), and the title to it contains no flaw, 
and the insurance is adequate — provided build- 
ings are included, making insurance necessary 
[169] 



How to Save Money 

— and the insuring company is sound, then a 
mortgage is as good, as solid, and as safe an in- 
vestment as it is possible to obtain, with, perhaps, 
the exception of United States Government 
bonds and gild-edged State and city bonds. 

The real estate mortgage pays the mortgagee 
from three to six per cent, occasionally more thaji 
six per cent; but any interest above six per cent 
is obtained at a sacrifice of the best security. 

Mortgages on large city properties, including 
buildings worth several hundreds of thousands of 
dollars or even millions of dollars, are seldom 
written at a rate exceeding four per cent, and 
some of them do not pay over three and one-half 
per cent. These mortgages are held usually by 
banks, trust companies, or by large estates. The 
small investor never figures in them, except 
indirectly, and has, therefore, little interest in 
them, save as they represent a security for his 
deposits in a savings bank or other institution. 

The trustees of large properties prefer the 
strongest security at a necessarily low rate of 
interest, and the large city mortgage is one of the 
best investments for them. 

Few homestead, farm, or residential mortgages 
are placed at less than four per cent, the average 
rate in the East being five per cent, and in the 
West and South from five to six per cent. 
[170] 



The Real Estate Mortgage 

Rates of interest are subject to territorial or 
financial conditions, the stronger the security the 
lower the rate of interest. During panics, when 
much money is temporarily locked up, it may be 
sold or let out at an exorbitant rate of interest. 

No Eastern real estate owner is justified in 
paying more than five per cent, provided he does 
not borrow more than sixty or seventy per cent 
of the selling value of his property. If the prop- 
erty has a fixed value, which does not often occur, 
he may borrow more than seventy per cent at five 
per cent. He will pay, usually, five and one-half 
or six per cent, if he borrows money in advance 
of building, the payments to be made as the build- 
ing progresses. This matter I have considered in 
the chapter entitled " Owning a Home." 

Money is worth, usually, a little more in the 
West and South than it is in the more conserva- 
tive East ; and, therefore, a higher rate of interest 
is obtainable; but high interest-paying mort- 
gages are not to be recommended to the small 
investor, salary-receiver, and wage-earner, unless 
he is thoroughly familiar with the property, and 
it is considered by conservative investors as offer- 
ing ample security. 

A not always written, and not by any means 
always followed, savings bank regulation forbids 
the loan of a larger amount than sixty per cent of 

[m] 



How to Save Money 

the real or selling valuation of the real estate ; f oi- 
example, if a parcel of real estate is worth ten 
thousand dollars, a savings bank cannot properly 
loan more than six thousand dollars upon the 
property. This condition, however, is not by any 
means lived up t<^ by other than the most con- 
servative and best managed institutions, for others 
frequently loan money dangerously close to 
valuation ; but as they loan so much, they may not 
suffer losses which will materially lower the value 
of the security offered their depositors. 

The cheapness of money at certain times and 
the competition in money-loaning apparently 
force some of the savings banks, and other con- 
servative investors, to take greater chances than 
they would permit under normal conditions. But, 
fortunately, these risks are usually spread out 
sufficiently to protect the bank against more than 
occasional loss. 

^^Tien this practice of loaning as much as 
eighty or ninety per cent upon property becomes 
chronic, the transaction is on a plane of specula- 
tion; and no bank is safe or sound which prac- 
tises it. 

The assessed valuation of real estate property 
may not represent its real and selling value, but 
in the majority of cases, it is under the selling 
price. 

[172] 



The Real Estate Mortgage 

A parcel of real estate has two distinct valua- 
tions : first, what it will bring under the hammer, 
that is, at a forced sale; and, second, what the 
owner can sell it for within a reasonable time. 

It is unfair to appraise an estate at what it 
will bring at auction, because £ew properties sell 
to advantage under the red flag. 

No general rule of valuation-making can be 
made. Judgment is the strongest factor. May 
I not suggest, however, that it is reasonably safe 
to consider a piece of property worth what it 
would probably bring at auction plus half the 
difference of the price which conservative real 
estate men believe would be realized upon it if 
sold under favorable conditions. For example, if 
the property would probably sell at auction for 
one thousand dollars, and conservative appraisers 
believe that it would bring twelve hundred dollars 
under favorable conditions, it is fair to consider it 
worth eleven hundred dollars. One can safely loan 
from sixty to seventy per cent of eleven hundred 
dollars upon this property, and he should not 
loan more than sixty per cent of its supposed 
value, unless the property is very desirably 
located and appears to be subject to increased 
valuation. 

Real estate men, and all other men for that 
matter, are likely to be biassed, and it is not well 

r 173 1 



How to Save Money 

to take the unsupported opinion of any one of 
them, nor should you consult only buyers and 
sellers of real estate. The first-class business 
man, who undoubtedly owns some real estate, is 
more likely to be fairer in his judgment. 

It is difficult to get at rock bottom, but if you 
loan only sixty per cent of what conservative men 
consider the true valuation, the transaction is 
likely to be reasonably safe, for comparatively few 
pieces of good real estate are likely to drop as 
much as forty per cent. 

Second and third mortgages are subsequent 
liens upon property, a second mortgage covering 
it after the first mortgage, and the third mort- 
gage covering the property after the first and 
second mortgages. They have no value, and 
offer no security, unless the property is worth 
more than that of the existing first mortgage or 
first and second mortgages. 

The first mortgagee has all the rights and 
privileges, and none of these extend to the sub- 
sequent mortgagee until the earlier mortgagee 
is satisfied. 

Second and third mortgages are perfectly safe, 
if the security is ample; but, upon general prin- 
ciples, I would advise the small investor to have 
nothing to do with them. They should be con- 
fined to experienced investors, who are thoroughly 
[174] 



The Real Estate Mortgage 

familiar with real estate, are able to weigh values 
to a nicety, and can afford to take speculative 
chances. 

It is obvious that second and third mortgages 
pay a higher rate of interest than that required 
by the owner of the first mortgage. 

While the first or bottom mortgage offers pretty 
close to giving the maximum of security, and pays 
a fair rate of interest, the mortgage is a safe 
investment only when the property has a tangible 
or obtainable value, and is not liable to more than 
slight fluctuation, when the title is clear, and the 
insurance good. Further, the value of the mort- 
gage is dependent upon its proportionate size 
compared with the value of the property. A 
mortgage for more than sixty per cent is not 
considered positively safe, as mortgages run. 
Seventy per cent may be fairly safe, and some 
times even eighty or ninety per cent is not with- 
out good security; but the small investor should 
seldom consider placing his money in a mortgage 
representing more than sixty per cent of the 
probable valuation of the property. 

A good mortgage is not a speculative proposi- 
tion. It cannot possibly pay more than the 
interest specified. The mortgagee is not likely 
to be able to obtain the property, for if it is 
worth much more than the face of the mortgage 
[175] 



How to Save Money 

upon it, the mortgagor can prevent foreclosure, 
and save his property. A good mortgage is, 
then, simply an investment, and worth its face 
value, never more or less. 

Notwithstanding that the mortgage is theoret- 
ically safe, and the low mortgage looks absolutely 
safe, numerous losses have occurred, due to 
several causes. 

First, the title may not be clear, and may con- 
tain one or more flaws, which will invalidate it to 
the mortgagee's loss; because, if the mortgagor 
does not own the property free and clear, and 
without objectionable restrictions, it is obvious 
that he cannot give the mortgagee a good title 
to it. A flaw in a title is, however, often cleared 
at slight expense. Bad titles are not uncommon. 
No one should place a mortgage until he is assured 
that the title is soimd. This may be ascertained 
with a reasonable degree of accuracy by a good 
title-searcher, or the title may be insured by a 
title insurance company. 

Secondly, if the property mortgaged is occupied 
land, the fire insurance company writing the 
policy may fail to be able to pay any, or but a 
small part, of the amount insured. In this case, 
the mortgagee meets with a loss, as it is probable 
that the land is not sufficient to cover the mort- 
gage. A fire risk, of course does not operate 
[ 176] 



The Real Estate Mortgage 

unless there is perishable property in the form of 
houses or other buildings. Most of the fire 
insurance companies are sound, and the insurance 
policy offers, usually, ample protection against 
loss by fire. 

Thirdly, perhaps the greatest risk in mortgage- 
taking is in the making of an unsafe loan upon 
property; that is, the lender loans more money 
than the value of the property would warrant. 
The mortgagor misrepresents, intentionally or 
otherwise, and places an inflated value upon the 
property, which it may be impossible to detect, 
unless one is an expert. 

In this country there are thousands of mort- 
gages written for amounts larger than the 
probable valuation of the property mortgaged. 
There is no law against placing a mortgage upon 
property in excess of its valuation. I have a 
perfect legal right to lend a thousand dollars 
upon a hundred dollars' worth of property, and 
the mortgage would be duly registered. 

Speculators and dishonest real estate brokers 
frequently make a specialty of dealing in unsafe 
mortgages. They mortgage property of their 
own, or held by dummies or middlemen. These 
mortgages are written for the full valuation, or 
more than the valuation, of the property. They 
are entirely legal. They sell them to small invest- 
[177] 



How to Save Money 

ors, and to those who are not able to weigh values. 
These men also place mortgages upon property 
which they have for sale, the mortgage represent- 
ing more than the value of the property, and 
then attempt to sell it for a small payment down, 
the mortgage remaining. For example, let us 
suppose that a piece of property is worth five 
thousand dollars. The real estate manipulator 
sells the house to a dummy, taking back a mort- 
gage of about five thousand dollars. He then, 
apparently, acts as selling agent for his dummy, 
and offers the alleged equity in the property for 
five hundred or a thousand dollars. The buyer 
gives a thousand dollars for the equity, when, in 
fact, he purchases nothing. He has simply made 
the agent a present of a thousand dollars. 

In buying a piece of mortgaged property, do 
not consider the mortgage as safe unless it is held 
by a reliable bank or first-class investor, and even 
then, subject it to full investigation. Many a 
man has purchased a home under mortgage, and 
has for several years made payments on the 
so-called equity, only to discover that his first 
dozen payments have been literally placed in the 
air. 

Unless one is experienced in real estate, it is 
practically impossible to appraise property close 
to its actual selling valuation. One is more likely 
[ 178 ] 



The Real Estate Mortgage 

to judge superficially, and to value the property 
from what it appears to be worth at the present 
time, without taking into consideration future 
conditions. 

It should be obvious that the value of a house, 
for instance, is dependent upon both the present 
and future worth of the land upon which it 
stands. A palace, costing a million dollars to 
erect, and located in the backwoods, might not 
sell for more than a thousand dollars, because 
nobody would want it. 

In every country there are situated magnificent 
residential edifices, costing vast sums of money; 
and yet comparatively few of them may be sold 
for more than a small fraction of their cost. 

The cost-valuation must not be considered 
except in close connection with location-valua- 
tion. A mortgage of five thousand dollars, upon 
a summer home costing a hundred thousand dol- 
lars, may not be worth more than half of its face 
value. 

Then, environment changes, and sometimes very 
suddenly. A respectable neighborhood to-day, 
becomes a disreputable one to-morrow. Land 
worth one dollar a square foot on a certain street 
may not bring fifty cents per foot five years from 
now. The erection of a factory materially injures 
the selling value of residential property, and a 
[ 179 ] 



Ho'uc to Sa'ce Money 

gsiiaige built near-by may lower it twenty-five 
per cent. 

It is, however, very unusual for property to 

depreciate as much as forty per cent within the 
life of the average mortgage. 

Let us suppose, for example, that you loan six 
thousand dollars upon a ten-thousand-dollar 
property, the house and land being worth, pre- 
sumably, ten thousand dollars. At the time of 
placing the mortgage you have ample present 
security and probable future security. It is quite 
likely that the building of a factory near by, or 
any other condition arising, will not bring the 
property below the six- thousand-dollar point 
within five years. If your mortgage does not run 
for more than this length of time, you are rea- 
sonably secure. 

In determining the investment value of a piece 
of real estate, it is, as I have shown, as necessary 
for you to diagnose its future as well as its 
present valuation. This is frequently difficult to 
do. Even the shrewdest real estate manipulators 
have suffered heavy losses, and many of them 
have become bankrupt. There is an element of 
risk in mortgage-taking, although it may not be 
admitted by all real estate men. 

Do not take a mortgage on a house to be built, 
advancing money as the building progresses, 
[180] 



The Real Estate Mortgage 

unless the owner of the land is known to be 
thoroughly honest, and the contractor or builder 
is a man of integrity. True, the temptation to 
obtain an additional rate of interest is great, and 
these mortgages are frequently thoroughly safe. 
Many residences are erected on these instalment 
mortgages. The owner has his land free and clear. 
Let us suppose, for example, that the land is worth 
a thousand dollars, and that the to-be-erected 
house will cost five thousand dollars. When the 
house is completed, the property will be worth six 
thousand dollars. The owner of the land mort- 
gages his land and his to-be-built house for four 
thousand dollars, the mortgagee paying over to 
him, or to his builder, the money in instalments, 
the mortgagor paying interest upon the entire four 
thousand dollars, although he may not receive 
the whole of it for several months. It is easy for 
the contractor or builder, and for the owner him- 
self, to misrepresent. The mortgagee is not 
likely to understand thoroughly the building busi- 
ness, and he may pay over his money faster than 
the building is built, giving the owner and builder 
an opportunity to put the money into their 
pockets, and to stop work upon the building, 
either from dishonest motives or from necessity, 
and both may use the money for outside specula- 
tion, with or without intention of making good. 
[ 181 ] 



How to Save Money 

The only advantage of this kind of a mortgage 
is that it bears an additional rate of interest. 

While I consider the real estate mortgage one 
of the best forms of investment, I would caution 
the small investor, salary-receiver, or wage-earner 
against mortgage-taking, unless he understands 
the real estate business or has friends who will 
give him expert and honest advice. However safe 
the mortgage may be, the money in it is usually 
tied up, so to speak. It is often difficult to sell 
a mortgage, or to raise money upon it, at short 
notice, and without paying a commission or bro- 
kerage, even though the mortgage may be gilt- 
edged. 

The man who is able to save only a little money 
had better be satisfied with the four per cent 
interest paid him by the sound savings bank and 
high-class bond, until he has sufficient money to 
take slight chances. 

Where there is little money, and where loss 
means great disaster, four per cent with safety is 
better than higher interest with even not far from 
the minimum of risk. 



[ 182 



The Chattel Mortgage 

CHAPTER XXI 

THE CHATTEL MORTGAGE 

A CHATTEL mortgage is a legal and reg- 
istered lien on practically every kind and 
sort of property other than real estate, — usually 
representing a loan on furniture, pianos, auto- 
mobiles, horses, carriages, boats, clothing, jewelry, 
and personal property, the most of which is in use, 
or has been used, and is, consequently, second- 
hand. Chattel mortgages are placed, also, upon 
stock in trade and every class of merchandise. 

The property mortgaged may or may not 
remain with the mortgagor. He is usually allowed 
to use it, but he cannot transfer it from one place 
to another without the consent of the mortgagee. 

Thousands of men, known as brokers and com- 
mercial agents, earn their livelihood by loaning 
money on this class of security. It is a business 
in itself, and should be practised only by those 
who understand it. It offers, with the exception 
of speculation, the best opportunity for loss, 
except to those who are able to appraise values 
and diagnose human nature. It is practically 
impossible for any one, unless he be an expert 
from long experience, to appraise correctly the 
[183] 



How to Save Money 

value of personal property; and judges of human 
nature are limited in number. 

Many of the people who borrow on chattel 
mortgages are unfortunate through no fault of 
their own. It may be due to unforeseen circum- 
stances, and is often the result of extravagance. 

They are transiently, or chronically, hard- 
pushed ; they turn to the chattel mortgage through 
necessity, often the most urgent necessity. Fre- 
quently they are unable to pay the principal or 
even the interest; consequently the lender has to 
foreclose. 

Unless one is almost completely hard-hearted, 
and devoid of most of the compassion which is 
supposed to accompany humanity, he had better 
keep out of this business. Of course, he has a 
right to his money, but to get it, it is often neces- 
sary for him to cause much mental and physical 
suffering, which frequently he must inflict upon 
the innocent and dependent. 

Under no condition would I advise the small 
investor, salary-receiver, or wage-earner, to loan 
his money, taking a chattel mortgage for secur- 
ity, unless he does it to help a friend, making his 
act purely a matter of friendship. I am opposed 
to it for him as a means of investment, for if he 
goes into it, using it as a receptacle for his sav- 
ings, he is pretty sure to be the loser. 
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The Fake Investment 



CHAPTER XXII 

THE FAKE INVESTMENT 

THERE are several reasons why I do not 
claim statistical accuracy for the state- 
ments I am about to make. The first reason is 
based upon the impossibility of finding author- 
itative data. There are facts and tendencies 
which we see, and which impress us with their 
prevalence, and yet they cannot be measured by 
rule or collated by numbers. 

I do not think that I will be accused of exag- 
geration, or of an attempt to appeal sensation- 
ally to the reader, if I advance the opinion that 
more money is lost, and more families are ruined, 
by the purchase of questionable and fraudulent 
mining and other stocks than result from any other 
cause, in business and out of business, except, 
perhaps, intemperance. 

There are now before the public, and there may 
be for many years, thousands of alleged invest- 
ment propositions, all of them sensationally 
advertised, and most of them offering little other 
than promises to do what cannot be done, and 
what their promoters know is impossible of 
accomplishment. They are virtually wholesale 
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How to Save Money 

or retail separators of the people from their 
money, and their existence is responsible for an 
unreahzed proportion of people among the great 
middle class who are in precarious financial cir- 
cumstances. 

Heavy losses, which produce present suffering 
and aifect the protection of the future, probably 
drive more men and women to the bad, and injure 
more children by depriving them of the neces- 
sities of existence, than does any other factor 
which comes into our everyday life. A loss of 
one's savings, which are usually hard-earned and 
come from protracted labor, a loss which may be 
accompanied with inability to provide sufficient 
food, and other bodily necessities, is, I believe, 
more responsible, directly or indirectly, for the 
existence and prevalence of crime, than is any 
other resourceful factor in the whole criminal 
catalogue. 

If this be true, and I have long heard it ad- 
vanced by sensible men, he who swindles the public 
and fraudulently obtains the people's money, is 
more responsible for the birth and life of vice 
than is he who practises vice. 

The seller and promoter of fraudulent invest- 
ments, who is usually a man of some apparent 
responsibilitj^ intentionally ruins men and women, 
and literally spreads disease and poverty. There 
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The Fake Investment 

are no alleviating circumstances in the action of 
his cursedness. If there were a stronger word 
than cursedness, I would use it. He has not even 
the excuse of the degenerate, who commits crime 
because of uncontrollable passion, or under great 
mental or physical provocation. 

This criminal of alleged respectability deliber- 
ately ruins that he may receive what he does not 
need, — a superabundance of wealth. The law 
cannot always reach him, and he will continue to 
exist, and to flourish, so long as both society and 
the Church refuse to take the trouble to discrim- 
inate, and to investigate not only the personal 
character of their members, but, what is of far 
more consequence, their business character. 

The immoral man, bad though he is, injures 
few beyond his personal reach ; but the fraudulent 
promoter and business fakir ruin towns-full of 
people, debauch legislatures, and are a public 
menace. 

Until alleged respectability becomes real re- 
spectability, and people forget dying in learning 
how to live, and take an interest in politics and 
citizenship, there would appear to be but one way 
to offset this growing evil, and that is to tell the 
public the truth about it, that the public may, if 
it will, no longer rest in the peaceful sleep of 
ignorance. 

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How to Save Money 

The schemes made and promoted by this class 
of men are complex and cunning. The man of 
sense and discretion, unless he has studied the 
subject and has lived close to human nature, may 
not readily understand how these financial sharks 
are able to swindle and re-swindle the people. He 
does not appreciate the standard ignorance and 
credulity of the public, and probably has not 
experienced the insane desire to get rich not 
only quickly, but instantaneously, at the least pos- 
sible expenditure of time, thought, energy, and 
money. 

So anxious are the people to get something for 
nothing, or to get much for little, that I believe 
one could finance a company which would bond 
itself to pay the running expenses of the national 
government, by means of a lottery, the lottery to 
be conducted on the square, and not as fake finan- 
cial schemes are manipulated. 

The gambling-table instinct is still character- 
istic of our people, and it is being encouraged and 
abetted by nearly every class of society. The 
progressive whist party, the bridge table, and the 
grab bag, on account of their alleged respecta- 
bility, are doing much to instil into our children 
the love of chance, and to give them a foretaste 
of the excitement of gambling. I am inclined to 
feel that they are doing more harm than that 
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The Fake Investment 

which comes from the pool room or the policy- 
shop. 

Respectable wrong-doing is more treacherous 
than is any other form of crime. 

An ounce of respectable sin weighs more than a 
pound of police-court criminality. 

The tendency of to-day is to get something with 
the least possible effort and expenditure, to take 
speculative and gambling chances. With the full 
knowledge that these conditions exist everywhere, 
— in the store, in the factory, in the home, and 
even in the school and Church, — the financial 
fakir casts his net and pulls in a straining load 
of foolish fish. 

The country is flooded with flaming advertise- 
ments of mining and other companies, which 
appear to offer everything and to guarantee 
everything, when, as a matter of fact, their guar- 
antees are worth less than the paper upon which 
they are written, for the paper was worth some- 
thing before the advertisement was printed upon 
it. It is obvious that these expensive advertise- 
ments, many of them costing thousands of dol- 
lars, would not appear if they did not pay, and 
they would not pay if the people did not read 
them and buy the things advertised. 

One of the most conspicuous swindlers of the 
day is the so-called mining company, with or 
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How to Save Money 

without a mine. In many cases its assets consist 
of superb, but leased, office furniture, well-dressed 
clerks, and magnificently printed prospectuses. 
There is usually a legal title, or option, to some 
land, perhaps a large tract, — enough to make a 
good appearance upon large-scale maps and serve 
as the physical basis for imaginary descriptions. 

In my opinion, ninety-nine out of every hun- 
dred of these heavily advertised companies offer 
neither investment nor business propositions ; be- 
cause no mines are located on their properties, or 
else, if mines do actually exist, they are either 
unprofitable, or are too far removed from the 
railroad for ore to be handled to advantage. 
Many of them are located near a well-known and 
profitable mine, and the promoters claim that this 
proximity to an ore-bearing district is evidence 
of marketable ore. This statement is illogical, 
and could not be borne out in fact. Proximity to 
an ore-bearing mine may not insure anything more 
than scattered ore. Good mining territory has 
its deserts as well as its oases. Ore runs in veins. 

The fact that an alleged mine is near a good 
mine, must not be considered as more than very 
indirect evidence that the property is ore-bear- 
ing. 

Occasionally fraudulent companies actually 
own mines which are capable of producing enor- 
r 190 1 



The Fake Investment 

mous quantities of good ore; the mines may be 
genuine, and the quality of the ore be substan^ 
tiated by reliable analysis ; but in most cases these 
mines are located away from the railroad, where 
the cost of transportation forbids possible profits. 
I recall a promoter who invaded my commu- 
nity, who came to conquer and who conquered. 
He was of prepossessing appearance, his clothes 
fitted him, his watch chain was not too large for 
a gentleman to wear, and the diamond in his scarf- 
pin was of modest dimension. By appearing to be 
moderate in his statements, he gave himself a bet- 
ter opportunity to exaggerate. He was well 
introduced. There are alleged respectable people 
who would introduce the devil to their daughters 
if he were in evening dress, — members of that 
growing class of society who consider a spotless 
shirt better than a spotless character. He re- 
ceived an audience. He brought with him samples 
of ore and photographs of his mine, accompanied 
with authentic assayers' reports. Investigation 
showed that he did not exaggerate the ore-bearing 
capacity of his property or the quality of the ore. 
Hundreds of men, including many who knew 
enough to know better, were ready to put money 
into his mine, and would have done so if it had 
not been for the shrewdness of one of them. He 
was acquainted with a man who lived within fifty 
L 191 J 



How to Save Money 

miles of the mine. He wrote to him, giving him 
full particulars, and requesting telegraphic infor- 
mation. The following message came over the 
wire: 

" Big mine. Lots of ore. Would take train 
of bald eagles to lug ore to railroad." 

Here were both quality and quantity. The pro-, 
moter did not misrepresent or exaggerate, so far 
as the ore was concerned. Legally he could sub- 
stantiate every statement that he had made; but 
he intentionally forgot to inform the would-be in- 
vestor that his mine could never become profitable 
because of its location. 

If you will read carefully the prospectus of the 
average mining scheme, you will find that, while 
it apparently tells the truth, and appears to guar- 
antee everything, it is legally irresponsible, 
probably written by an expert who knows how to 
juggle words, and who has the ability to make 
nothing read like something, or to make a little 
seem like a lot. 

The prospectus has, as a rule, much more to 
say about property in general, than about the 
property owned by the company. It is filled with 
pictures, which may and may not come from orig- 
inal photographs ; it deals more in futures than it 
does in presents; what it apparently says is op- 
posed to what it actually says ; and it does not 
[ 192 ] 



The Fake Investment 

really say much of anything, although it appears 
to cover everything. In nine cases out of ten, 
yes, in nine and nine-tenths cases out of ten, it 
is a doctored document,^ — a typographical fool- 
catcher. 

A careful analysis of the average mining prop- 
osition would appear to furnish sufficient proof 
to any sane man, or to any man with half-sense, 
that there is no basis for investment. But, un- 
fortunately, sane men and men of half-sense, or 
with even quarter-sense, do not consider these 
schemes, and take no pains to warn the public 
against them. They are left, therefore, to the 
all-fools or half-fools, who, through natural or 
acquired ignorance, allow avarice to outweigh 
everything else. 

The camera is a very obedient servant, and 
makes a specialty of being accommodating. It 
will make a picture of anything you want it to, 
and, if you treat it well, it will not show dis- 
crepancies. Most of the photographs picture 
action, and are either fixed-up to represent the 
grossest exaggeration, or else are not taken upon 
the property owned by the company. A good pic- 
ture can be made of a very poor thing, if the 
photographer knows his business ; or a good thing 
belonging to somebody else may be substituted 
in an advertisement. 

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How to Save Money 

An honest, reliable, and high-class mining ex- 
pert delivered a lecture recently upon mining 
enterprises. While holding in his hand the pros- 
pectuses of three mining companies, each one of 
which was a superlative example of the printer's 
art, he said: 

" These companies are said to be located in 
Blanktown. The prospectuses give them an ag- 
gregate valuation of five million dollars. They 
are selling their stock for ten cents a share, and 
they guarantee that it will be worth a dollar a 
share within a year. I live in Blanktown. I am 
mayor of Blanktown. I am president of the 
Blanktown National Bank. I never heard of one 
of these companies, and yet I am supposed to 
know as much about my town as does anybody 
who lives in it. Blanktown has a population of 
less than twenty-five hundred, and yet it appears 
to be possible to hide five million dollars' worth of 
property so securely that the mayor and the 
president of the bank have no suspicion of its 
existence." 

It is a fact that much of the mining stock ad- 
vertised is not worth the printing of the certifi- 
cates, and I think I may say with safety that 
practically all heavily advertised stock is either 
primarily fraudulent and worthless, or is of 
questionable value. 

[ 194] 



The Fake Investment 

Many a company pays a dividend, or appears 
to do so, the dividend coming out of the money 
paid in for stock. The foolish buyer receives 
part of his money back in the form of dividends, 
the dividend not representing the earnings of the 
company. 

It is easy to pay dividends, and even large 
ones, when the stock is selling rapidly and for 
enough money to allow a reasonable amount of it 
to be used for bait. The only dividends good for 
anything are the earned dividends. Any promo- 
ter can pay large dividends, if enough money 
comes in from the sale of the stock to allow a 
proportion of it to be used for the purpose. For 
example, you pay a hundred dollars for stock, and 
the promoter still makes money if he gives you a 
dividend of half of it, at the same time dangling 
the bait of a dividend-paying investment, which 
you and your friends are eventually sure to bite. 
In other words, he gives you back half of your 
hundred dollars, and swindles you out of the bal- 
ance only, in order to establish confidence. 

I have already tried to explain the reasons 
which permit the fraudulent promoter to prey 
upon people, and to do it continuously, but the 
following story illustrates them. 

A scheme-promoter and his friend were smok- 
ing at the club. Between puffs of fifty-cent 
[195] 



How to Save Money 

cigars, which manipulators can afford to smoke, 
the following conversation took place: 

" Mr. Blank," said the friend, " how under the 
sun do you manage to unload the stock of your 
company, when every sensible man knows, and you 
know, that your property is not worth one per 
cent of what you claim it is ; and you know, and 
I know, that it can never earn a dividend? It is 
a fake, pure and simple." 

The promoter did not get angry. Promoters 
never do. Their faces are metal-plated, and their 
consciences are iron-covered. They are too well 
satisfied, and making too much money, to be 
provoked, even at the truth. Throw truth at 
them, and it does not harm them if it hits 
them. 

" My friend," replied the promoter, " step to 
the window and count a hundred passersby, and 
tell me when you reach the hundredth one." 

In a few minutes, the required number of peo- 
ple had passed the window, and the friend reported 
it to the promoter. 

" How many of them, my boy," said the pro- 
moter, and his eyes twinkled, " how many of the 
hundred you have just counted really think for 
themselves.'' How many of them know anything 
beyond what they have to know?" 

The friend puffed silently, and watched the 
[ 196 ] 



The Fake Investment 

rings of smoke ascend and disappear. Then he 
said : 

" I should think about one ; possibly a little 
less than one." 

Arising, the promoter slapped his friend upon 
the back and exclaimed, " I sell my stock to the 
ninety-nine plus." 

Some of the claims and statements made by ex- 
ploiters are so extravagant, so obviously untrue, 
so sublimely exaggerated, and often so intensely 
humorous, and, mark you, so successful as they 
run, that they furnish indisputable evidence that 
a proportion of the great middle class of people 
have brains, judgments, and understandings made 
up of streaks of sense running parallel to streaks 
of idiocy. 

Recently a projector succeeded in selling con- 
siderable stock in a company which either was to 
operate, or which merely claimed to be going to 
operate, a cat ranch. The announcement of the 
company, printed upon coated paper, between 
illuminated covers, read that the promoter would 
collect a million net cats. This brilliant statistician 
and mathematician, basing his diagnostical state- 
ments upon the scientific attainments of the ages, 
assumes, without allowance or reservation of any 
kind, that each cat would average twelve kittens 
a yeai. At the end of the first year there would 
[197] 



How to Save Money 

be on hand a stock of one million original cats 
plus the cumulative dividend of twelve million kit- 
tens or cats, — a net stock of thirteen million cats 
of diverse ages. The promoter guarantees that he 
can sell each white skin at ten cents, and each pure 
black skin at seventy-five cents. His knowledge of 
the future is so unassailable that he estimates that 
the twelve million skins will sell at an average of 
thirty cents apiece, making a revenue of about ten 
thousand dollars a day gross from cats killed, at 
the same time reserving one million cats for stock- 
ing-up purposes. 

The promoter assures the prospective pur- 
chaser of stock that one expert man, or that one 
and a fourth expert women, can skin fifty cats a 
day at a wage of two dollars. Consequently it will 
take a hundred men to operate the ranch, giving 
a net profit of nine thousand eight hundred dollars 
per day. 

He proposes to establish a rat ranch next door, 
where a good grade of rats will be raised as food 
for the cats. 

Rats multiply four times as fast as cats, there- 
fore one million progressive rats will furnish four 
rats per day for each cat. This wonderful pro- 
moter, who is probably the great grandson of the 
fellow who tried to discover perpetual motion, has 
no difficulty in providing for the physical care of 
[198] 



The Fake Investment 

the rats, because the carcasses of the cats are 
not sold with their skins ; hence what is left of the 
cats is eaten by the rats, allowing a fourth of a 
cat for each rat per day. 

It will be seen, even by the dullest investor, that 
the business cannot help but be self-supporting 
and automatic. The cats will start in by eating 
the rats; and the rats, before and after being 
eaten by the cats, will eat what is left of the cats ; 
and the company will get the skins. 

While this idea is not strictly original, — being 
only a method of realizing financially upon the Kil- 
kenny cat theory, — the promoter fails to carry it 
far enough, and moreover, shows great biological 
ignorance, because he does not skin the rats be- 
fore giving their left-overs to the cats. This 
waste will undoubtedly be remedied, and will dou- 
ble the value of the stock. 

Prospective buyers are earnestly requested to 
telegraph their orders, otherwise they are not 
likely to get an opportunity to share in the enor- 
mous profits of the concern. 

Ridiculous as the foregoing scheme seems to be, 
the assertions and figures are taken directly, in 
a condensed form, from an announcement actually 
sent out to the people, and presumably bringing 
returns. 

There is, and must be, a reason for everything, 
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How to Save Money 

and all things permit of logical conclusions. If 
the property is as valuable as the promoter says 
it is, do you think there would be any need of 
such strenuous pushing for the selling of the 
stock? 

Our financial centres are flooded with idle 
money. Money is plenty and cheap. Is it at all 
likely that the owner of a really good proposi- 
tion would find much difficulty in raising the 
necessary funds for its development from the men 
who have money and who are anxious to invest 
it? Would extensive advertising and elaborate 
prospectuses be used, if there were sufficient in- 
trinsic value to speak for itself without the flaring 
of typographical banners? Would the promoter 
sell stock for less than what it is worth, if it was 
worth what he says it is worth? 

No, The promoter advertises that he may 
reach the fools, because the fools will buy any- 
thing. 

It may not be generally known that the great 
miners of the country employ a class of employees, 
known as " detective workmen," each one being an 
experienced miner. When a new mine is discov- 
ered, and trained miners have some reason to 
believe that there is something in it, these detec- 
tive workmen obtain positions there as working 
miners. They easily discover the worth of the 
[ 200 ] 



The Fake Investment 

mine. They report to their employers. If what 
they say is favorable, regular mining investors, 
men who know how to weigh mining values, buy 
up the mine or become interested in it, and the 
stock is seldom if ever advertised more than 
moderately. 

The great mining interests of America are able 
to take care of all the good mines, and these mines 
are not likely to be offered to the public at less 
than par. 

I think that we may set it down as a fact that 
practically all mining stock advertised at less 
than par is worth nothing, or very little, and that 
it is in every respect an unsafe investment. 

So far as my experience and investigation go, 
I declare emphatically, and without qualification, 
that I never knew of a profitable or valuable min- 
ing stock, or any other kind of stock, which was 
offered at a few cents on the dollar or was more 
than moderately advertised. 

I consider the heavy advertising of stock at 
below par, or extensive advertising of any stock, 
as reasonable evidence of probable fraud. 

Further, I would advise every investor to keep 
away from any stock, where the advertisement of 
it announces that the price will be raised within 
thirty days, or within any other specified time. 

Legitimate stocks rise or fall because of the 
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How to Save Money 

demand or lack of demand for them, as well as 
by their intrinsic value, and the date of this 
change cannot be set by any financier, or by any- 
body else, for nobody can foresee the future 
value of any stock. If the stock is going to be 
worth much more in thirty days, is it not obvious 
that the promoter himself, or his friends, would 
purchase the whole of it, and not be philanthropic 
enough to accommodate the public by allowing it 
to come in? 

I would advise every investor to shun any kind 
of stock or investment the announcement of which 
suggests philanthropy or the desire to benefit the 
public. I believe that any statement in an adver- 
tisement to the effect that the promoter wants to 
do good, to share his profits with the customer, is 
prima facie evidence of intentional, premeditated 
fraud. 

Further, I consider any statement to the effect 
that a limited number of shares will be sold to 
one person as of fraudulent intent, and should be 
so considered. 

Business is business, and there is no sentiment 
about it. The seller sells, because he wants to 
sell, and he cares nothing about the buyer. 

Keep away from any company which claims to 
let you in on the ground floor. This position is 
occupied by the promoters, and the public is 
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The Fake Investment 

lucky if it gets on to the roof, — unlucky, rather, 
because it is likely to take a tumble. 

Upon general principles, it is well not to pur- 
chase any advertised investment, unless the adver- 
tisement is moderate in tone, is small in size, and 
bears the signature of a thoroughly reliable bank- 
ing house. 

Before investing in mining, or in any other 
stock, I advise you to protect yourself by inves- 
tigating along the following lines : 

In the first place, look up the reputation and 
standing of the promoters and others connected 
with the company. Probably most of them are 
unknown or little known, and a close investiga- 
tion may show that some of them have been under 
indictment and have figured in the criminal courts. 

Occasionally, the names of good men appear in 
the announcement. This is often accomplished, 
because many men of character are ignorant of 
business ways, and are, therefore, an easy prey 
to smooth-tongued and broadcloth-clad adven- 
turers. 

Occasionally, you will find the name of a lead- 
ing divine in the company's directory. Probably 
he is sincere, and has been led into doing that 
which he would not have done had he known the 
truth. 

I would advise you to beware of any announce- 
[203 ] 



How to Save Money 

ment containing the names of clergymen, doctors, 
or other professional men, no matter how honest 
they may be. As they are not good business men, 
they may have been inveigled into allowing the 
use of their names. The very appearance of 
their names may be considered an evidence of 
fraud. Their innocence and ignorance do not 
offer you any protection. 

Carefully analyze the names of the officers and 
directors. Some of them may be billed as follows : 
" John Blank, of the great firm of John Blank 
and Company." It may have but a bare existence. 

The fact that one of the directors is the presi- 
dent of a bank is insignificant, unless the bank is 
of high financial standing. 

There are many banks and trust companies, 
which are unworthy of public confidence, and are 
but accessories to swindling schemes. 

Positively refuse to invest in any stock unless 
the company is officered by men of solid reputa- 
tion, men of unquestionable character, men whose 
reputations are above par. But even then I 
would advise you to be cautious. You have no 
nght to take speculative chances, imless you are 
a professional investor. 

Before purchasing mining or other kinds of 
stock, I suggest that you call upon the president 
and cashier of several reliable banks or Institu- 
[204] 



The Fake Investment 

tions for savings. Request these men to read the 
prospectus issued by the company, and ask them 
for information regarding the stock as an invest- 
ment. If all of them, or most of them, speak 
highly of it, then you will have some justification 
for purchasing it ; but I would advise you to drop 
it, if even one of these men condemns it. 

Give no weight to the financial opinion of any 
professional man, unless he has a reputation for 
financial sagacity. Rather depend upon the ad- 
vice of business men, and do not. allow any one 
business man to settle the matter for you. 

If an investment is good for anything, there 
are, at least, half a dozen first-class business men, 
who will not only advise you to buy the stock, but 
who have purchased it themselves for investment. 

Pay absolutely no attention to any claim made 
by a promoter. Purchase nothing unless several 
business men of character and standing would, 
without qualification, advise you to make the in- 
vestment. 

But be careful not to interview people who are 
friendly to the stock, because they may be in- 
directly in the employ of the promoter. A little 
investigation may show that the stock is selling 
on the street at a much lower rate than that asked 
for it at the company's office. 

Think a little. How many people do you know 
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How to Save Money 

who have made a cent by buying mining stock or 
other advertised investments? I am not referring 
to the names given in the gilt-edged prospectuses. 
How many people do you actually know, directly 
or indirectly, who would repeat their experiments 
in stock-buying? 

The buying and selling of stock belongs to 
financiers, to men who can afford to lose, and 
who are able to take speculative chances. Even 
if the opportunities of success were a dozen times 
greater than they are, I would advise the small 
investor to keep away from stocks as they run. 

Allow your good sense to rise to the surface and 
to take command of your pocket-book. Suppress 
enough of your folly, — for you must have some, 
as none of us are without it, — to hold your money 
in safe keeping. 

Even the crudest common sense knows, or 
should know, that, if the stock is as good as the 
promoter reports it to be, it would not be sold for 
a few cents on the dollar or at bargain prices, 
when the safe deposit boxes of the world are over- 
flowing with unused money. 

If the mine owner has not sufficient money to 
develop his mine, and his mine is a good one, 
would it not be more profitable to obtain money 
where money is cheap, from men of money, men 
who know how to manipulate money, than it would 
r 206 1 



The Fake Investment 

be to spend thousands, and hundreds of thou- 
sands, of dollars in advertising the stock and for 
extravagance in selling? 

Another good way to find whether or not the 
stock is good for anything is to ask the promoter 
to give you the names and addresses of those who 
have purchased the stock three, six, or nine 
months previously. Visit these people, or cor- 
respond with them. Find out whether or not they 
are ready to sell, and, also, whether or not they 
would buy any more stock at the present prices. 

As the man without friends is hardly a man, so 
the investment without high-class recommendations 
is unsafe and unworthy of consideration. 

Still another excellent way to test the invest- 
ment value of any stock, or other security, is to 
ask the president, cashier, or other official of a 
conservative bank, to loan money upon it ; that is, 
ask him if he will take this stock as collateral 
either at eighty per cent of its par value, or at 
a much lower per cent. No stock is worth buying, 
to hold as an investment, unless leading bankers 
will receive it as collateral for at least seventy-five 
per cent of its face value. 

Still another good way of testing is to call at, 

or write to, the promoter's office and ascertain the 

selling price of the' stock, then, under the name 

of a friend, ask this same promoter what he will 

[ 207 ] 



How to Save Money 

give you for a certain number of shares of the 
stock. Let us suppose, for example, that the stock 
is offered at ten cents a share, and that the pro- 
moter states positively that it will be worth a 
dollar a share within a year. If this be the case, 
it is obvious that financiers would buy up the en- 
tire issue, and that the promoter would gladly 
buy back the stock at a price very little less than 
the selling price. Try him and see, and the 
chances are that he would not pay you one cent 
a share for the stock he is selling you at ten cents 
a share, unless he knew you were making the test, 
and purchased a few shares for advertising pur- 
poses. 

Under the chapter heading of " Industrial 
Stock," I have attempted to warn the reader 
against another important class of fraudulent in- 
vestment. Every kind of property, and every 
class of business, is dishonestly promoted by 
swindlers, but the majority of questionable and 
dishonest companies handle mining, oil, land, and 
industrial properties, largely because, perhaps, 
these kinds of property lend themselves to highly 
colored descriptions and greatly exaggerated state- 
ments. 

True, the savings bank and the bond pay a 
very low rate of interest, but sure little Interest 

[ 208 ] 



Tlie Fake Investment 

is worth more than unpaid great interest. Better 
receive little interest, than risk your principal for 
big interest. 

" When in doubt, don't," is a pretty safe rule 
to follow. 



[209] 



How to Save Money 

CHAPTER XXIII 

OWNING A HOME 

THE chronic materialist labors under his self- 
generated delusion that there can be no home 
worth having, unless the occupants of it hold clear 
title to the purely material part of it. He has 
a tumultous feeling of grief-showing-sympathy 
for the flat-dweller and boarding-house inmate. 
Upon the lecture platform, if he be an educator, 
or upon the stump, if he be a politician, he tells 
the people that the strength and integrity of the 
nation are vested in the home-houses of its peo- 
ple. He has forbidden the millennial sun to peep 
over the earthly horizon until every family is 
separately housed and owns a piece of land with 
a building upon it. 

While I would not minimize the intrinsic value 
of the material home, and the paid-for home- 
house, while I believe that one is far better off with 
a home of his own, and while I feel assured that 
separate houses are preferable to collective abodes 
like flats and boarding-houses, I am not willing, 
as yet, to bring myself close enough to earth to 
refuse to believe, and to feel, that the true home 
is as much of a spiritual and mental affair as it 
[210] 



Owning a Home 

IS materialistic, and that It Is not, therefore, 
necessarily, wholly dependent upon physical con- 
ditions or environment. Undoubtedly the combina- 
tion of the right kind of spiritual home with the 
material house produces a far better result than 
either can hope to offer by itself alone. 

The home-making spirit, even though it may be 
manifested in the materialistic, is to be encour- 
aged by Nation and State, and by every individual 
who would help the present and provide for the 
future. 

Probably the healthiest and best material form 
of a home is a detached house, with its own in- 
dependent yard, provided that sanitary and other 
necessary conditions are satisfactory. It is ob- 
vious that this kind of a residence cannot exist 
in the heart of a great city, but must be located 
In either the suburbs or the country. It is a 
fact, unfortunately, that business and livelihood- 
earning conditions force millions of people to live 
in large cities, and will not permit them to visit 
the country except at occasional Intervals. 

There appears to be no good reason why every 
one should not strive to own and occupy, or to 
occupy without owning, a separate and inde- 
pendent house and yard, provided that they are 
not off-set by inevitable disadvantages, by local 
conditions, and by distance and travel, 
[2111 



How to Save Money 

Fathers and mothers have rights, and all of 
these rights should not be always sacrificed for 
the children. Where sacrifice is necessary, it 
should be divided up among all the members of 
the family, that it may not fall wholly upon any 
one of them, except where there is sickness or 
constitutional weakness. 

Although I am opposed to the bringing up of 
children in the city flat, or in any other closed-in 
apartment, I have little sympathy with the senti- 
mentalist, who would drive the hard-working 
father into the distant suburbs or country, with 
poor transportation facilities, when his work re- 
quires his early and late presence in the city. The 
health of the bread-earner is as necessary as the 
health of the children, and both should be con- 
sidered. 

Bad as the city flat is, it is better for some 
people, and some families, than is the suburban 
home, — not better in itself, but better because of 
peculiar and unfortunate circumstances. 

City life has some advantages, and the flat- 
dweller can often die of old age, if he will. One 
can be healthy almost anywhere, if one takes 
proper care of oneself. Attention to personal 
matters is as important as satisfactory environ- 
ment. The healthiness of the open country is 
often over-estimated. City water, polluted though 
[212 1 



Owning a Home 

it may be, is purer than that coming from the 
average country well. The sanitary conditions 
in the city are usually better than those in the 
open country. The city man is nearer his work. 
It is better, therefore, for some men to be flat- 
dwellers, provided they can reside in a respectable 
part of the city, than it is for them to spend a 
large portion of their time in uninteresting travel, 
always in crowded and poorly ventilated cars, 
and invariably at the sacrifice of time and com- 
fort. 

But I would enthusiastically recommend the 
suburban or country home-house, or even the 
suburban flat, to those who can maintain it, be- 
cause, upon general principles, the country, and 
especially the open country, is preferable to the 
city block and street, and certainly the country 
is the place for children. 

But do not forget that your family can thrive 
almost anywhere, if they take the proper care of 
their physical bodies. Care of the body has much 
more to do with health than mere surroundings. 
Folk live and die in every community, and under 
all conditions. But give the suburbs or the country 
the preference. 

It is obvious that the city man of small income 
cannot own either a flat or a city residence. If he 
would have a home-house of his own, he must lo- 
[ 213 ] 



How to Save Money 

cate in the suburbs or in the country. It is also 
obvious that the young married man especially 
does not have the ready cash for the full purchase 
of a modest home. He must either wait a con- 
siderable time, or obtain his house and land on 
mortgage. 

Is it better to wait until one is able to own a 
home of his own, or to live in a mortgaged house? 
Whichever way may be preferable, it is a fact 
that probably ninety-five per cent of the residences 
in the city or near the city, and that fully sixty 
per cent of the country homes, are either under 
mortgage or were obtained with the aid of a mort- 
gage. So universal is this custom, that it would 
be difficult to argue against mortgaged home- 
houses. 

Economists of every class, and most of our 
leading philanthropists, are almost unanimously 
agreed that it is better to have a home-house that 
is mortgaged than no home-house at all, pro- 
vided the cost of carrying the mortgage is not 
burdensome. 

It is easy to place upon a house a mortgage of 
from sixty to seventy-five per cent of its real or 
selling value, and savings banks, or other con- 
servative money-lending institutions, are looking 
for chances to lend money on good real estate, 
never realizing a rate of interest over six per 
[214] 



\ 



Owning a Home 

cent, and usually only five per cent, if the security 
is satisfactory. 

In New England, and other parts of the East, 
money can be had at five per cent, six per cent 
being required in some Western and Southern lo- 
calities. 

Let us suppose, for example, that a man, with 
a family and a fair income, has sufficient money 
to pay from thirty to forty per cent of the cost 
of a house and land. Most assuredly would I 
advise him to make the purchase of this home- 
house, allowing a mortgage not exceeding seventy 
per cent to be placed upon it. I would prefer a 
mortgage of not over sixty per cent, provided, of 
course, that the owner intends to remain per- 
manently in town, and that the location selected is 
not likely to deteriorate in value. 

I do not advise any one to submit himself to 
a mortgage so large that he has no real equity in 
the property. 

While the manipulation of real estate, next to 
the practice of agriculture, is said to be the 
basis of wealth-getting, real estate, both good and 
bad, cannot usually be disposed of at will. It 
is not negotiable like a bond or a share of high- 
class stock, nor is it easy to let a house to a 
good tenant. Many a desirable place has re- 
mained vacant for months and years, and from 
[215] 



How to Save Money 

ten to twenty per cent of the people who hire 
houses either pay slowly or do not pay at all, 

I would recommend most emphatically the pur- 
chase of a home-house to any one with a family, 
or with a prospective family, provided he is per- 
manently located, and is able to assume the 
responsibility. It is certainly a good way to in- 
vest one's money, and the money remains where 
he can see it, feel it, and live with it. It en- 
courages thrift, and adds to character and 
stability. 

Hundreds of thousands of families are living 
in houses obtained under the instalment payment 
plan. Each month they make a payment of an 
amount which may not be much more than the 
regular rent would be. This money reverts to 
the principal, so that when all of it has been paid, 
they will have a clear title to the property, or an 
arrangement may be made whereby a deed will 
be given after a certain number of payments have 
been made, the balance to be held on mortgage. 
This is an excellent way to obtain a home-house, 
provided one is reasonably sure that he can meet 
his obligations ; but it never should be taken ad- 
vantage of by those whose incomes are both small 
and intermittent ; nor should this arrangement be 
entered into under any forfeiture clause in the 
agreement which forfeits to the purchaser all the 
[216] 



Owning a Home 

money he has paid in if he does not make all of 
his payments. 

So popular has become this method of obtain- 
ing a home that it has been taken advantage of 
by land speculators and land sharks, who have 
been able, by extensive advertising, and by every 
form of misrepresentation, to swindle the public 
out of millions of dollars. They usually purchase 
cheap land in the vicinity of good land. A very 
attractive plan is drawn, with modern streets 
laid out, and all necessary improvements. Many 
of these streets and improvements remain upon 
paper. Lots are sold at an apparently low price, 
and upon instalments, often a sum as small as 
five dollars being sufficient for the first payment. 
Then the land manipulator offers to build a 
house at a stated price, which is almost invariably 
more than the house is worth. He makes the 
proposition attractive by offering to sell it on 
what he calls easy terms. The man of moderate 
income jumps at the bait, and because he can 
afford to pay a few dollars a month, he eventu- 
ally finds himself obligated to either lose what he 
has paid in or pay from twenty-five to fifty per 
cent more than the property is worth. 

The principle of instalment home-buying is 
thoroughly legitimate, and certainly offers many 
advantages to the salary-receiver or wage-earner, 
[217] 



How to Save Money 

provided he keeps away from land schemes, from 
boomed land, and avoids all property which is 
not well located. 

I would advise him to have nothing whatever 
to do with over-advertised property, with land 
boomers of any class, unless the property is 
thought well of by conservative real estate men 
who have no interest in it. 

Never buy any real estate, vacant land, or 
land with a house on it, until you have consulted 
at least two first-class business men, who are real 
estate owners, and who are able to appraise real 
estate. Never take the unsupported word of the 
man who has the real estate to sell. Officers of 
savings banks are usually well posted upon real 
estate matters. 

Many people build their houses, borrowing the 
money in advance of the erection of the building. 
They own the land free and clear, and the bor- 
rowed money is paid over to them as the build- 
ing progresses. Under this arrangement they 
pay interest on the whole amount borrowed, or 
to be borrowed, even though the building may not 
be completed for several months. Usually they 
pay one per cent more interest, because the 
loaner takes a greater risk. I am not advising 
against this plan. It has its advantages, and 
is frequently the best way to obtain a home-house. 
[ 218 ] 



Owning a Home 

While I am very much opposed to indebted- 
ness, and while I believe that a man who is free 
and clear has a better chance to fight the battle 
of life, I feel reasonably sure that the home-house, 
with a mortgage upon it, is better than no home- 
house at all. 

A mortgage of fair size on a piece of property, 
which the mortgagor can handle without undue 
pressure, need not be, and should not be, a stum- 
bling block in the way of success-making. It gives 
him the opportunity of maintaining a home of his 
own, and this should be an incentive to save. 

There are few better or safer ways for the in- 
vestment of money than to place it in a home- 
house, provided the location and other conditions 
are right. 

When one has his money invested on his own 
premises, he sleeps upon his investment, — he de- 
rives a benefit from it other than financial. But 
let him be careful. Better be overcautious than 
hasty. If the location is not good, or if it is 
likely to deteriorate, his investment may be a 
very poor one and entail considerable loss. 
Changes are always occurring and many a good 
location has become a poor one within a few 
yearSi A good neighborhood cannot be guaran- 
teed. The erection of a garage, or of a fac- 
tory, near by, may injure the adjoining property 
[219] 



How to Save Money 

sufficiently to wipe out the equity held by the 
owner. 

The value of real estate is dependent upon its lo- 
cation and the adjoining property, and the worth 
of the building is dependent as much upon its loca- 
tion as upon the cost of its construction ; for exam- 
ple, a brick business block, costing one hundred 
thousand dollars and located in a purely residential 
district, would not be worth anywhere near as much 
as it would be if on a business street. A ten- 
thousand-dollar residence, in a small village, 
would not sell for much more in the open market 
than would a house costing half that amount. A 
palace in the wilderness may not be worth any 
more in dollars and cents than is the hermit's 
camp on the other side of the hill. What you pay 
for building a house does not necessarily fix its 
value, for the location of the house has much to 
do with it. 

In purchasing a home-house, then, you should 
consider, not only the cost of construction, but 
the present and future value of the location. 

While I would advise a man of family, or of 
other dependents, to purchase a home, or equity 
in one, provided he can afford the expense, and 
his income is well assured, I would not advise him 
to put all of his money into real estate, either for 
a home or for an investment. 
[ 220 ] 



Owning a Home 

It Is not good judgment to put your last dol- 
lar, or near your last dollar, into any piece of 
property, for it will leave you without ready 
funds, and it is not safe to be without ready 
money. 

Let us suppose, for example, that you can af- 
ford to carry a three-thousand-dollar home-house. 
If you have only one thousand dollars available 
cash, and it is necessary for you to use the whole 
of this money for the first payment, I would ad- 
vise you to wait ; but if you have from fifteen hun- 
dred to two thousand dollars in cash, you are 
probably in a position to put a thousand dollars 
into a home-house, the balance of your money to 
be kept where it will be available. For the man 
of family should carry some ready cash to meet 
emergencies, and he should never lock up all of 
his money where it cannot be easily and quickly 
realized upon. 

No matter how much your equity may be in 
the house itself, it is difficult to raise money upon 
mortgaged property without paying a premium 
and without considerable delay. Cash in hand is 
the only thing that will meet emergencies, unless 
one has much property or extensive credit. Bet- 
ter be without a home-house than without ready 
money. 

Again, let me impress upon you the necessity 
[ 221 ] 



How to Save Money 

of making a full investigation of the locality, and 
of other conditions, before purchasing any real 
estate, and, further, have the title carefully ex- 
amined by a good lawyer, or guaranteed by an 
insurance company. 

Hundreds and thousands of people have lost 
their all by purchasing home-houses, and other 
real estate, because of unforeseen depreciation 
and bad titles. Of course, certainty is impossible, 
and we must take some chances ; but intelli- 
gent and persistent investigation is likely to 
prevent loss. 

Do not depend upon yourself. Unless you are 
in the real estate business, or own considerable 
real estate, you cannot possibly be able to ap- 
praise property with much accuracy. Consult 
those who know but who are not financially in- 
terested, and do not depend upon the advice of 
any one man. 

Do not imagine that the ownership of a home- 
house is going to make a success of you. The 
elements of success-making are composite. The 
home helps, and so do all other right conditions. 
You are better oif without a home-house than 
with one when you cannot afford to have one; 
but the right kind of a man will create a happy 
and profitable home anywhere and under all 
conditions. 

[222] 



Owning a Home 

The home spirit in a flat is worth more than the 
lack of it in a palace. 

The home of good cheer and good will, located 
on the upper floor of a dingy city block, is far 
better, and contributes more to the up-building of 
man, than does the loveless house resting in a 
garden of roses. 

The man and the woman, not the house, make 
the home. 



[ 223 ] 



How to Save Money 

CHAPTER XXIV 

LIFE INSURANCE 

ALTHOUGH the question of life insurance 
is one of mighty consequence, opinions 
about it show the greatest diversity, and are con- 
tinuously subjected to periodical change; there- 
fore, it is well to burn our bridges of prejudice,, 
that we may look upon life insurance as a definite 
and necessary commodity, and recognize it as a 
means of protection, possessing its own peculiar 
and exclusive advantages. 

The past and present investigations of life in- 
surance companies, and the many scandals and 
irregularities which have been unearthed, have 
turned the searchlight of truth upon one of the 
largest of our commercial enterprises. 

Probably nothing in business, and representa- 
tive of everyday life, has been subjected to so 
much comment and criticism, both for and against 
it; but even the most bitter enemies of life insur- 
ance, or rather of the methods followed by life 
insurance companies, find themselves forced to 
admit that, if life insurance had not earned a 
rightful place in the economy of home and busi- 
ness affairs, if it did not possess in large 
[224] 



Life Insurance 

measure the essentials of a commodity, if there 
were not well-founded reasons for its existence, it 
would not have reached its present magnitude, 
nor could it occupy a substantial and permanent 
place in the world of business. 

Its survival, after every fair and unfair at- 
tack upon it, has proved it to be a commodity. 
If it were not, it would have died long ago. 

Life insurance, stripped of its technicality, is 
a very simple proposition. The insurance com- 
pany or corporation, working under State charter 
and supposed to be subject to State law, en- 
ters into a contract with the insured party, which 
agreement, in consideration of a cash payment 
down and a series of cash payments extending 
over a period of years or during the life of the 
insured, guarantees to pay the person or per- 
sons designated a stated sum of money, either at 
the death of the insured or at a specified time 
appearing in the policy. 

There are almost innumerable forms of pol- 
icies, known by various names, such as thfe so- 
called " straight life insurance," " endowment 
insurance," " ten- or twenty-payment life insur- 
ance," and insurance written in the form of bonds. 

The common or usual form of policy is what 
is known as " straight life insurance," where one 
must die to win; although some companies will 
[ 225 ] 



How to Save Money 

pay the insured the face value of his straight life 
policy if he lives to reach an abnormal age. 

Another popular form is what is known as en- 
dowment insurance. This usually costs double 
what is paid for a straight life policy. Under 
this agreement, the company obligates itself to 
pay the insured the full value of the policy at the 
expiration of a specified time, or at his death. 

The so-called ten-, fifteen-, or twenty-payment 
policy is a sort of compromise between the straight 
life and endowment policies, the insured having a 
paid-up policy after he makes the number of 
payments called for, but the money not being 
paid over until his death. 

The insurance bond is another form of insur- 
ance, the bond having a certain definite value, 
and being negotiable at face value, and at any 
time. 

All of the States either regulate, or claim to 
regulate, by law, the forms of policies written 
within their jurisdiction, and most of the States 
require the company to write into every policy 
cash-values, which are operative after the first, 
second, or third year, which amounts net are due 
the policy holder if he discontinues payments upon 
the policy, or desires to cash it in, 

I would emphatically advise no one to take out 
any policy, of any amount whatever, in any com- 
[ 226 ] 



Life Insurance 

pany, no matter how strong it may be, unless 
there is written in the policy definite cash sur- 
render values. If your insurance agent cannot, 
or will not, place you in one of these companies, 
consult another agent. 

Life insurance is commercially legitimate, and 
custom and necessity have made it a commodity. 
If one looks at it through the narrow lens of the 
purely ethical, he may consider it more or less 
of a gamble, the insurance company betting on 
the life of the insured, and agreeing to pay the 
debt if it loses; but even this severe critic must 
admit that it differs materially from common 
gambling, because the insured party continues to 
contribute to the insurance pool, making his con- 
tributions in the form of periodical payments. 
Nor does the insured need to take lottery or 
gambling chances, for the good policy has a cash 
surrender value, and the insured, after a few 
years, may at any time, receive a benefit other 
than that coming from luck. 

I have said that life insurance is considered a 
commercial commodity, a business necessity, and 
a family protection. Commercially it is, but not 
theoretically, because a commodity, under a strict 
definition of the term, is something which is not 
written upon paper, something neither promised 
nor guessed at, something which is material and 
r 227 1 



How to Save Money 

weighable, something which we can see and feel. 
But to all intents and purposes we may consider 
life insurance a commodity, because it gives us 
protection, and appears to be necessary under 
the present social and economic conditions. 

The expense of insurance cannot be calculated 
with complete accuracy, as can be the cost of an 
eatable or of a house. When you purchase a 
building, for example, you may be able to deter- 
mine, by examination, what it is worth; and if 
you build, you may know what it will cost you. 
On the other hand, when you take out a life in- 
surance policy you do not know, and cannot 
know, what the expense of it will be to you, nor 
does the company know, for neither of you knows 
how long you will live. 

While I recognize the necessity of life insur- 
ance, truth compels me to say that I believe the 
present life insurance policy costs more than does 
any other commodity. Investigations show that 
larger commissions are paid by life insurance 
companies to their agents for the sale of life in- 
surance than are probably given for any other 
business transaction. Anywhere up to half, or 
even a larger proportion, of the first payment 
upon a policy goes to the agent and not to the 
company, and is not used to increase the com- 
pany's assets or to give better protection to the 
[ 228 ] 



Life Insurance 

policy holder. Instead, it finds its way into the 
pocket of the agent, the insured party actually 
paying the agent for soliciting his insurance, — 
that is to say, we, the insured, pay a proportion 
of the cost of our insurance, not to the company 
which insures us, but to the agent who solicits us, 
and this go-between is without responsibility or 
reliability, and has no part in the transaction 
save that of soliciting the business. Even part 
of our subsequent payments may be given to him. 

This condition makes life insurance expensive, 
forcing it to cost more than economy would 
justify. 

The real, or apparent, necessity for this so- 
licitor, the high commission paid him, when in- 
surance is admitted to have a tangible value, 
represents one of those peculiar conditions in 
business-doing, for the existence of which there 
would seem to be no sensible reason. 

So long as we need coaxers, instead of waiters, 
of trade, commissions or salaries must be paid to 
the salesmen; but it is extremely difficult to un- 
derstand why companies find it necessary to give 
such large commissions for insurance-getting. 
It would seem that, if we need life insurance, we 
would have sense enough to walk into the ofiice 
of an insurance company and buy a policy over 
the counter, the same as we purchase furniture 
r 229 1 



Hou: to Save Money 

or clothing: and yet, a representative of one of 
our largest insurance companies informs me that 
a voluntary application for life insurance is 
practically unknown, substantially all policies 
being written after solicitation, usually with much 
solicitation, and sometimes virtually with coercion. 

Unbiassed men and business economists, who 
have made a study of the life insurance question, 
are of the opinion that this form of insurance can 
be sold for much less than the price charged for 
it by the insurance companies. This suggests 
the general establishment of insurance companies 
under the direction of the State or National Gov- 
ernment. 

Already savings banks have added insurance de- 
partments, and are offering insurance at a fair 
rate, but not at as low a rate as was expected. 

The savings bank is supposed to handle it at 
cost for the benefit of the insured, and when sav- 
ings bank insurance becomes general, the expense 
of carrying a poHcy will undoubtedly be much less 
than the cost now prevailing. Certainly an ar- 
ticle so vital as good Life insurance should not be 
so largely in the hands of manipulators and finan- 
ciers, who are in business for the revenue only. 

Some form of cheap, and yet thoroughly pro- 
tectire, insurance should be given to the poor and 
to those of moderate means : and I believe it is 
L 230 1 



Life Insurance 

the business of the State, if not of the National, 
Government, to establish and maintain insurance 
companies at cost. 

Life insurance has a value, especially, to three 
classes of people; 

First, the working man, or business man, or 
clerk of small income, who has, or may have, some 
one dependent upon him. The uncertainty of life 
makes it obligatory that he should provide for 
emergencies and death. Even at an exorbitant 
cost he is justified in carrying a moderate amount 
of life insurance, not as an investment, but as a 
protection. He should purchase the cheapest 
form of policy, and should not consider any en- 
dowment or other form which the insurance com- 
pany presents as an investment, unless he be a 
spendthrift and not willing to save except under 
compulsion. 

The second class that can use insurance to ad- 
vantage includes men of considerable wealth, who 
live extravagantly and luxuriously, and who are 
likely, at any time, to meet with financial disaster. 
They can afford to pay high rates for pro- 
tection, and life insurance to them may be con- 
sidered as a sort of investment, which would be 
questionable under ordinary circumstances. As 
their incomes are large, they can afford to carry 
policies representing hundreds of thousands of 
[2311 



How to Save Money 

dollars, and the endowment form gives them a 
sort of high-class investment, which, under the 
circumstances, it may not be unwise for them to 
carry. But I would not advise any conservative 
man of much money to use the endowment or any 
other form of life insurance as a pure investment. 

The third class of people, who should carry in- 
surance, is the spendthrift, natural born fool, or 
one who has acquired foolishness, — that class of 
our population which has little realization of the 
value of money, and which cannot, or will not, 
save by any legitimate or systematic method, ex- 
cept where loss accruing from non-payment is 
great enough to penetrate their understanding. 
These men have not brains enough, nor charac- 
ter enough, to save systematically. If they lived 
within a nest of savings banks, they would patron- 
ize none of them. If they are frugal to-day, they 
are criminally extravagant to-morrow. The 
straight life policy, or even an endowment, may 
force them to do what they have not sense enough 
to do voluntarily. Of course, they over-pay for 
what they get, but they had better over-pay for 
insurance than for things of less consequence. 

There is a large distinction between protection 

and investment. Life insurance has a protective 

value, and is often a necessity ; but it offers little 

in the way of investment compared with the 

[ 232 ] 



Life Insurance 

ordinary forms of investment, I say this notwith- 
standing the claims made by insurance com- 
panies and the bombastic advertising put out by 
them. 

As all commercial insurance companies are 
purely business propositions and institutions for 
money-making, the managers of some of them are 
likely to exaggerate the truth, and to attempt to 
force upon the public policies which pay the com- 
panies the best, rather than those which are 
best for the policy holders. They employ highly 
paid agents, and use methods of coercion as well 
as of persuasion. Many of them are extrava- 
gantly run, pay their officers salaries which are 
all out of proportion to the amount of work given, 
and are dishonestly connected with financial in- 
stitutions, their money being a part of a circle 
of money, a convenient way of getting money for 
the putting through of large financial deals. 
Yet, although not all of the companies are con- 
ducted along what may be considered commercial 
lines of straight honesty, most of them are thor- 
oughly reliable so far as making payments are 
concerned. They give the protection they claim 
to give. 

So-called industrial insurance at times offers 
a needed protection even though many economists 
give it a general condemnation on account of its 
[233] 



How to Save Money 

cost, which they consider exorbitant. I would 
not advise any one to consider this class of pro- 
tection until he has consulted some good banker, 
financier, or business man of standing, telling 
him frankly of conditions and family responsibili- 
ties, and at th§ same time showing him the kind 
of policy which he contemplates taking out. 
There are many forms of this class of insurance, 
and some of them forfeit to the insured all of his 
payments if he lapses at any time. I am em- 
phatically against any form of forfeiture policy. 

Philanthropists are considering this proposi- 
tion, and it is to be hoped that the States will, 
sooner or later, establish industrial insurance de- 
partments, which will give needed protection at a 
much lower cost, and which will not require the 
insured to forfeit all he has paid if he discon- 
tinues his payments. 

I would advise a man of small income to con- 
sider insurance only as a protection, and not to be 
influenced by any statement made by the insur- 
ance company or the insurance agent. I believe 
that a proportion of the printed claims made by 
insurance companies, and especially those so 
glibly talked by the insurance agent, although 
sometimes technically true, are almost invariably 
misleading, and are often intended to deceive. 

I think that many an insurance agent writes 
[234] 



Life Insurance 

a policy under false pretences ; but, notwithstand- 
ing this condition, and notwithstanding the unre- 
liability, and even rascality, of some insurance 
men, straight life insurance, for a man of small 
income, is to be encouraged, and would appear to 
be a necessity, if any are dependent upon him. 

If the family needs protection, and the head of 
it is not well-to-do, with money securely invested, 
he should take out a straight life insurance pol- 
icy as large as he can conveniently carry, as 
large as he can afford to pay for at the present 
time and during the probable future. But I ad- 
vise him not to consider life insurance as an in- 
vestment. If he has money to invest, after he 
has properly protected his family by insurance, 
let him put it in the savings banks, or secure it 
in some other way. Life insurance is to him a com- 
modity, and he should buy it at the lowest cost. 

Remember that it is the company, not the 
agent, that gives the protection, that the agent 
has no responsibility whatever. 

If you do not know about life insurance, ask 
some one who does. Obtain the advice of some 
good business man, provided hie is not connected 
with an insurance company. The officer of your 
bank is posted, and so are successful men in gen- 
eral. 

Avoid all insurance clubs and insurance 
[235 ] 



How to Save Money 

schemes. Refuse to believe any statement made 
in print, or elsewhere, to the effect that there is 
any club or individual working in your interest. 
I believe that every one of these clubs, and all of 
these men, and all so-called insurance experts, are 
in the employ of some insurance company. 

Positively refuse to consider statements made 
by insurance companies that a certain form of in- 
surance policy gives you a better investment and 
at less cost than you would receive at a savings 
bank. Take this statement to a first-class math- 
ematician or accountant, who will undoubtedly 
make it plain to you that money deposited in a 
savings bank will give you more than will come 
from the same amount of money paid to an in- 
surance company. But this condition does not 
operate against the value of an insurance policy, 
because life insurance gives a protection against 
death, and one which should not be ignored by 
the man of family. But protection is not neces- 
sarily investment. 

It is true that in some forms of policies you 
do not pay in the face value of the policy, and 
that you receive, at its expiration, more money 
than you gave the company; but if you had put 
these instalments in the savings bank you would 
have more money in the bank at the end of ten 
or twenty years than the face value of your policy. 
[236] 



Life Insurance 

Bear in mind that policies in all good com- 
panies are substantially alike, that there is more 
apparent than real difference in the forms pre- 
sented, although each company may use different 
kinds to catch the unwary. No one good policy 
is likely to be worth more than another good pol- 
icy, notwithstanding what the agent says. 

The special inducements offered by some life 
insurance companies, are, in my opinion, purely 
imaginary, and are used to fool the people. 

Select some first-class life insurance company, 
through the advice of your bank, or some com- 
petent friend who is fair and unbiassed, and have 
as much insurance as you can afford to carry and 
need for protection. 

Read your policy carefully, and if you do not 
understand it, have it read by some first-class 
business man or lawyer. It may appear to give 
you what it does not. Insist upon having in- 
serted the nonforfeiture clause, which prevents the 
company from taking advantage of any techni- 
cality or statement made by you after a year or 
so has elapsed. 

Then, with your policy filed safely away, you 
will have the comfort of feeling that you have a 
post-mortem asset whether or not you live to 
benefit from it. 

[ 237 ] 



How to Save Money 



CHAPTER XXV 

FIRE INSURANCE 

A DISCUSSION of fire insurance is not out of 
place in a book like this, because, although 
it may not be considered a form of regular invest- 
ment, it is not removed from the investment class, 
and, certainly, no sharp line should be drawn 
between pure investment and necessary protec- 
tion. 

The cost of carrying fire insurance is not ex- 
cessive. 

A fire insurance policy should be placed upon 
every piece of propert}^, which is subject to any 
risk and can be covered by insurance, including 
buildings, horses, carriages, automobiles, boats, 
furniture, works of art, jewelry, and clothing. 

So much do I believe in the necessity of fire 
insurance that I consider an unwillingness on the 
part of any one properly to protect his property 
as close to an inexcusable crime. Even if one 
has only a few dollars' worth of property, he 
should insure it against loss by fire. The cost is 
very small in proportion to the value of the pro- 
tection given. 

There are a number of large fire insurance 
[238] 



Fire Insurance 

companies, and most of them are progressive, 
sound, and reliable. 

No first-class agency will write a policy in a 
weak company, but it is well for you to ascer- 
tain the standing of the company before taking 
a policy in it. It is a deplorable fact that most 
business men insure in any company presented to 
them, and that comparatively few of them dis- 
criminate for or against a company. 

Many insurance agents carry their business in 
their hats, and do not have even a local standing. 
They may represent weak and almost worthless 
companies. If the agent is not a man of stand- 
ing, refuse to insure in his companies, unless you 
are assured of their reliability by some first-class 
business man who is able to weigh insurance 
values. The character of the agent, however, does 
not affect the value of the policy. The agent has 
no responsibility. 

Never allow an insurance policy to lapse. 
Every one should carry a diary, or dated memo- 
randum book, and mention of the expiration of 
the policy should be placed therein on the date of 
the expiration, and also on a date a week or more 
in advance of it. 

If you have good local standing and employ a 
reliable agent, he will, at your request, give you 
a letter in which he agrees to renew your policy 
[239 ] 



How to Save Money 

without notice. This fully protects you. If the 
agent does not officially renew the policy, his 
agreement to do so amounts to the same thing in 
law. 

It is well to read your policy over carefully. 
There are many different forms, each one pre- 
senting different conditions. Some policies do not 
cover damage resulting from lightning unless fire 
occurs. Other policies do not allow you to vacate 
the premises. Some policies are invalid if you 
carry more than a gallon of gasoline in your 
house. Full protection costs very little if any 
more than partial protection. Make a truthful 
statement to your agent, and tell him that you 
want full protection. There is only one price, 
which is made by the board of underwriters. 
Consequently, insurance in the strongest company 
costs you no more than the same policy in a weak 
one. 

There is a form of baggage insurance, which 
may be taken by any one who travels. It is very 
inexpensive, and gives absolute protection, cover- 
ing your baggage and personal effects in any part 
of the United States and Canada, on any rail- 
road, train, baggage car, freight car, steamer or 
other vessel, coach, carriage, and in any store- 
house, house, hotel, and club, or in any other 
likely place. 

[240] 



Fire Insurance 

Do not over-insure or under-insure, but always 
insure for full value. If you over-insure you can- 
not get more than the value of the property 
burned, and you pay the extra cost for nothing. 

Always carry a schedule of your property, even 
to the number of books insured, and place this 
paper in your safe, or, better, in a safe deposit 
box, or in some secure place away from the prop- 
erty insured. Do not leave your policies in a 
bureau drawer. 

An insurance policy is supposed to cover the 
market value of the property at the time of its 
destruction, not necessarily what it will sell for, 
but what it can be replaced for ; for example, you 
have a sideboard which cost you one hundred dol- 
lars. As a second-hand piece of furniture it 
would not sell for more than fifty dollars, but you 
can insure it for one hundred dollars or close to 
that sum. Articles which have a problematic 
value, like paintings and rare books, should be 
insured as works of art, and so specified in the 
policy. . 



241 ] 



How to Save Money 

CHAPTER XXVI 

ACCIDENT INSURANCE 

DURING the last quarter of a century, ac- 
cident insurance has become somewhat uni- 
versal and often epidemic. In some places this is 
due, not only to the fact that it has intrinsic 
value, but to the enterprise of the insurance com- 
panies. 

Many people thoroughly believe in the necessity 
of carrying accident insurance, while others are 
opposed to it. 

The fact that it is very inexpensive is indica- 
tive that accidents are rare. If they were fre- 
quent, the cost of the insurance would be much 
larger. 

If you travel, or your work is hazardous, you 
should, most emphatically, take out an accident 
policy; but if you are not subject to more than 
ordinary risk it may not be worth while, although 
I can see no objection whatever to carrying it, 
particular^ as the expense is small, and I think 
that I would favor it upon general principles. 

If you are a working man or clerk dependent 
wholly upon your wages or salary, with no money, 
or little money, saved up, an accident policy may 
[ 242 ] 



Accident Insurance 

be considered a necessity. Many a poor man has 
been able to take care of his family, while sick 
from accident, because of his insurance. 

It is well to read your policy over carefully. 
You may find that it is written in the interest of 
the company far more than in yours, and that it 
does not give all the protection that you think 
it does. Understand your policy before taking it. 
Show it to your lawyer or to some good busi- 
ness man. Understand what you are getting 
before you go to the expense of getting it. 



[ 243 ] 



How to Save Money 

CHAPTER XXVII 

THE ANNUITY 

THE annuity is a presumably safe but not 
common form of investment. It is similar 
to life insurance in general principles, but differs 
from it in that the holder of a straight life policy 
must usually die to win, while the man with an 
annuity must live to win. 

An annuity is an agreement, made by an in- 
surance or other guaranteeing company, to pay 
the annuity-holder a specified sum of money, by 
the month or by the year, so long as the holder 
of it may live. 

Practically all life insurance policies are ob- 
tainable by the making of a first payment and 
continuous, periodical payments, but the annuity 
must be paid for wholly in advance. 

The expense of life insurance is based upon 
age, the younger the insured, the smaller the 
cost. These conditions are reversed with annui- 
ties. The older the person, the less he pays for 
an annuity. 

No physical examination is necessary, for, as 
a matter of fact, the older and weaker the person 

r 24-i 1 



! 



The Annuity 

insured, the better it is for the insuring com- 
pany. 

Comparatively few annuities are taken out by 
other than aged people, those who are too old, as 
a rule, to continue in active business, and who 
prefer the guarantee of a stated sum for the bal- 
ance of their lives to any other form of invest- 
ment. Then, to many of these people, the annuity 
offers a larger income than it may be pos- 
sible to obtain from the interest on the sum paid 
for the annuity; for example, it is possible to 
purchase an annuity large enough to live upon 
for, perhaps, twenty thousand dollars. Twenty 
thousand dollars, at five per cent, will yield an 
annual income of only one thousand dollars, which 
may not be sufficient for the comfortable support 
of the man who is considering an annuity. 

By taking out an annuity in a first-class com- 
pany, a comfortable income is assured for life, 
and the holder of it need give no thought to his 
financial future. But before buying an annuity 
it would be well for him to consider what his 
twenty thousand dollars is worth to him if he re- 
tains it. Perhaps it would be wiser for him to 
use the interest, and a part of the principal, than 
to take out an annuity, particularly if his days 
are numbered, and, provided, of course, that his 
money is well invested. The chances are that he 
[ 245] 



How to Save Money 

will not outlive his money, and would, then, be 
able to leave something to relatives, friends, or 
charity, instead of paying it to the annuity com- 
pany. 

Each case must be considered by itself. Each 
must be weighed for both advantages and dis- 
advantages. 

I would suggest that if you are considering an 
annuity, you discuss the matter with your doctor 
and some good business friend, who are familiar 
with your circumstances. Together, you would 
probably arrive at a profitable conclusion. 



246 



• Backing Business 

CHAPTER XXVIII 

BACKING BUSINESS 

ACCURATE statistics are impossible, but it 
would appear to be self-evident that a pro- 
portion of those who start in business for 
themselves borrow a part of their working capital, 
obtaining it from banks, trust companies, friends, 
or from others. 

It is of this " others " that I am writing, — 
those who would loan their money to men start- 
ing in business or who would enlarge their busi- 
nesses. 

This book is devoted to men of limited means, 
who are unable to save more than small sums. 
I do not propose to offer any suggestion to the 
large investor, — to the captain of industry, or 
to those who deal in money-lending. The pro- 
fessional money-lender makes a business of loan- 
ing money. Money to him is a commodity. He 
has it for sale. He is prepared to meet large or 
small losses, his profit depending upon the aver- 
age safety of his investments, not upon the 
success of any one of them. He is under the pro- 
tection of the law of averages. 

Loss and risk are parts of the scheme of busi- 
[ 247 ] 



How to Save Money 

ness-dbing; but only the minimum risk should be 
taken by one of small income. If large risks are 
justifiable, they should be confined to those who 
can afford to lose, who know how to play the 
game of speculation, and who will not touch bot- 
tom if they meet with ordinary or occasional 
losses. 

Altogether too often men of considerable means, 
and small investors, loan money to friends and 
acquaintances, who are about to start in business, 
or who desire to extend their business and have 
not the necessary capital for doing so. Some- 
times this is done for friendship's sake, but more 
often on account of the high rate of interest paid, 
or the promise of large returns. 

I consider this form of money-lending removed 
from investment, so far as the man of little money 
is concerned. At best, it is hazardous — 

First, because the loaner is not likely to be 
capable of accurately diagnosing business con- 
ditions ; he is not in a position to know the ins 
and outs of the business for which the money 
is to be loaned. 

Secondly, he may be influenced either by 
friendship or by visionary expectation, and be 
led to believe that he will receive an exorbitant 
return for his loan. 

Thirdly, it is unusually difficult to obtain good 
[248] 



Backing Business 

security, or much of any except unreliable pro- 
spective. 

Fourthly, the lack of judgment on the part of 
the borrower, or many other causes, may operate 
for loss. 

Fifthly, his money is at arm's length; yes, 
more so; for it is altogether out of his reach. It 
is not like money in the bank, subject to draft; 
it is money where it cannot be called in when 
wanted. 

Let me again impress upon the salary-receiver, 
wage-earner, and the man of low income, that 
they have no business or moral right to consider 
any form of investment which does not present 
the maximum, or close to the maximum, of se- 
curity. 

Unless one is financially able to take speculative 
chances, he should not place his money out of 
his control, except in the best of investment se- 
curities, or in making deposits where there is 
actual safety, or what is so considered by the 
best judges of investments. 

True, when one deposits in the savings bank, 
or buys a government bond, his money passes into 
the control of others, and he is given no right 
to dictate the action of those who handle his sav- 
ings. But his money is better protected than it 
would be if he had it, because it is in the hands 
[ 249 ] 



How to Save Money 

of conservative and experienced men, — not any 
one man, — and subject to the care of a com- 
posite organization. 

It should be borne in mind that about ninety 
per cent of the men in business for themselves 
either have failed or will fail during their career. 
True, many of them recover from disaster and 
become successful ultimately. But when accu- 
rate statistics show conclusively that bankruptcy, 
or some other form of failure, is sure to be the 
experience of nine-tenths of the men in business, 
it would appear obvious that the small money- 
saver had better not take so great a chance with 
his hard-earned accumulation. 

A man may be justified in taking a little more 
than reasonable risk with his active money, — that 
money which he, himself, controls, — but it is 
certainly bad judgment to invest one's savings 
where they are unprotected, either by personal 
or composite security. 

The man of small income should never back 
anybody's business, save his own, or loan money 
to anybody without ample security, unless the 
loan be out of friendship, and then only when the 
pressure of friendship, or the friend's necessities, 
are great enough to warrant the risk which some- 
times friendship rightly requires. 

[250] 



Backing Business 

Never loan money to anybody, under any cir- 
cumstances, without security, unless you do it for 
love, and do not do it for love without taking 
yourself into consideration. 



[251] 



How to Save Money 

CHAPTER XXIX 

KEEPING A BANK ACCOUNT 

THERE are three kinds of banks of deposit: 
First, the national bank which cannot be 
capitalized for less than twenty-five thousand 
dollars, and is under the direct supervision of the 
United States Government. This supervision, 
however rigid it may be, does not, and cannot, 
guarantee the reliability of the bank, or se- 
cure the depositor against loss. It can, at 
best, but safeguard him, and operate as a 
protection. National banks fail, but, as a rule, 
fewer of them collapse than any other class of 
financial institutions. The depositor is a pre- 
ferred creditor, and he must be paid first; there- 
fore, when the bank fails, he is quite likely to 
receive all, or nearly all, of the money held on 
deposit, although he may be obliged to wait some 
time for all of it. Unless the collapse is almost 
complete, the other banks are likely to stand by 
the one in trouble, and to advance a large part of 
the deposited money, in which case the depositor 
would not have to wait more than a few days or 
weeks, except for a small percentage of what he 
had on deposit. 

[ 252 ] 



Keeping a Bank Account 

Secondly, trust companies, or loan and trust 
companies, which are institutions incorporated 
under State law, and subject only to State in- 
spection. The larger and better trust companies 
are usually co-members with national banks of 
the local clearing houses, and are then subject to 
some supervision by the clearing-house officials. 
This supervision is quite likely to be very rigid, 
partly because the failure of a loan or trust com- 
pany affiliated with the national banks is a direct 
injury to all members of the clearing house. As 
the laws in some States are not as strenuous as is 
the national bank law, it is quite probable that 
many loan and trust companies do not receive 
as thorough a supervision as is given to the na- 
tional banks. But many large trust companies 
are officered by men of ability, integrity, and 
responsibility, and are as financially sound and 
as safe as are the majority of national banks. 

Thirdly, the so-called State bank. This insti- 
tution is practically the same as is the national 
bank, except that it is not under the supervision 
and inspection of the United States Government. 
As a matter of fact, there is very little difference 
between it and the loan and trust company. 

National and State banks, and loan and trust 
companies, differ from savings banks in that they 
do a purely commercial business, the depositor 
[ 253 ] 



How to Save Money 

or customer placing his money in the bank that 
he may draw it out by check at any time. The 
depositor is, besides, entitled to what is knows 
as " accommodation," the bank agreeing to dis- 
count his paper and to loan him money from time 
to time, provided, of course, that the security 
offered by him, or his credit, justifies the loan. 

The national bank issues bank bills or paper 
money. No other institution does it, although 
the State bank can legally do so, but is prevented 
by a prohibitory tax. 

National banks do not, as a rule, pay interest 
on deposits subject to check, unless the account 
is somewhat inactive, or is very large. 

An inactive account is one where the depositor 
does not make more than an occasional deposit, 
and draws comparatively few checks, and does 
not often borrow money from the bank. Because 
his account requires very little clerical work, some 
national banks pay interest on deposits if they 
average a thousand dollars. Practically, all 
State banks, trust companies, and loan and trust 
companies, pay their depositors two per cent on 
daily balances of not less than five hundred dol- 
lars, a few companies allowing interest on three 
hundred dollars, and some do not pay more than 
one and a half per cent. Occasionally, a trust 
company or State bank pays tyvo and a half to 
r 254 1 



Keeping a Bank Account 

three per cent on daily balances subject to cheeky 
but I do not believe that any well-managed insti- 
tution can afford to give so high an interest rate. 
If it is paid, I am inclined to think that the bank 
is doing it at a loss, and any voluntary loss, 
unless the money involved is used for legitimate 
advertising or development purposes, does not 
speak well for the bank's standing and reliability. 

Some State banks and loan and trust companies 
maintain a savings bank department, which is 
separate and distinct from the regular banking 
department. 

The depositor places his money in a bank for 
two reasons : 

First, that it may be secure. 

Secondly, that he may use it as he wants it, 
drawing it out by check. This is a great con- 
venience, as it obviates the necessity of carrying 
large sums of money on one's person, or of keep- 
ing it in the office or home, and is the best protec- 
tion against robbery or other loss. It offers also 
the convenience of paying bills by check, and 
sending remittances by mail with the liability of 
loss reduced to a minimum. It has another ad- 
vantage, which is of considerable consequence, 
for the depositor, if he carries a deposit of fair 
size, will be accommodated by the bank whenever 
he is short of money, provided, of course, that he 
[ 255 1 



How to Save Money 

can give security. No reputable bank ever takes 
more than the current rate of interest, and that 
is always far below that asked by loan agencies. 
The borrower usually makes out a note for the 
amount desired, carries it to the bank, and the 
officers or directors pass upon it. The note must 
either be endorsed by some reliable person, or 
else accompanied by some security, — stock, 
bonds, or the like. If the note is accepted, the 
face value of it is paid to the depositor, less the 
discount or interest. For example, let us suppose 
that you borrow a thousand dollars from your 
bank for four months at six per cent interest or 
discount. Six per cent interest per annum is two 
per cent for four months. The bank, therefore, 
instead of giving you one thousand dollars, gives 
you but nine hundred and eighty dollars, taking 
out of the thousand dollars in advance the inter- 
est or so-called discount. The note must be paid 
at maturity or renewed. 

I would advise any one, if he has a sum of not 
less than two hundred dollars, to open an account 
in some good bank, and to pay all of his bills, ex- 
cepting small ones, by check. Not only is this 
a great convenience, but it is more businesslike; 
it is a protection against loss; it offers a legal 
receipt for money paid out, provided the check is 
made payable to order and not to bearer, for the 
[ 256] 



Keeping a Bank Account 

receiver cannot obtain his money unless he en- 
dorses the check, and this endorsement is a receipt. 

A good banking connection is of great value to 
any one, whether he does business or not, whether 
he is a clerk or is in business for himself, or whether 
or not he needs a bank for borrowing purposes. A 
man with a bank account stands better in the 
community, in business and out of it. The mere 
fact that he has available bank money is prima 
facie evidence that he has some local standing. 
Even men with small incomes can save enough 
money, if they will, to start a checking account. 

It is quite easy to ascertain the weakness or 
soundness of a bank. The character of the men 
in command counts for much. They are usually 
of high standing, rigid integrity, and progressive 
conservatism. Their position is known to other 
bankers, and bank officials are usually willing to 
give expert opinion of the standing of other insti- 
tutions. The bank that is unknown is unsound, 
and its officers are ordinary business men, either 
of no standing at all or of little reputation. 

Never deposit any money in the bank, large or 
small, until you have inquired about it. If it is 
all right, the majority of the business men in the 
town know about it. If it is shaky, responsible 
parties will refuse to recommend it. 

As a rule, do not ask a professional man to 
[257] 



How to Save Money 

give his opinion of the character of a bank or 
other institution. Go to some well-known busi- 
ness man of character and standing. Better see 
two or more of these men. Naturally they know 
much about the inside of every bank in town, or 
they are acquainted with men who do know. 

If there is no bank in your place of residence, 
and the nearest one is some miles away, you can 
easily obtain the rock-bottom facts. A letter ad- 
dressed to any large national bank in a city will 
bring a courteous reply. Responsible bankers 
never speak well of weak institutions; they can- 
not afford to do so. Better write to two or three 
city banks. The names of the officers and direc- 
tors of all reliable banking institutions are public 
property, and their reliability is known to every 
near-by banker and large business man. 

There are scattered throughout the country, 
usually in small towns, banks of deposit owned 
and controlled by unreliable men with question- 
able reputations. Many of these banks are links 
of a chain of banks. Frequently they are con- 
trolled by one man, who is able, at any time, to 
wreck them. Unless you are a financial expert, 
your own opinion is worth very little. If a re- 
sponsible business man or banker recommends the 
bank, your money may be placed there at the 
minimum of risk. 

[ 258 ] 



The Cooperative Bank 

CHAPTER XXX 

THE COOPERATIVE BANK 

THE cooperative bank is, as its name implies, 
a combination of men banded together for 
mutual interests and protection. It deals exclu- 
sively in real estate and real estate mortgages, 
its loans, as a rule, being confined to its members. 
Its capital is obtained by selling shares, each 
share-holder having full voting rights, and some- 
thing to do with the management of the business 
and the investments. 

The share-holders elect the proper officers and 
committees, whose province is to invest or loan 
the money, presumably at the very maximum of 
safety. They are not supposed to take any risk. 
There is usually little or no opportunity for em- 
bezzlement or irregularity, because little ready 
cash is on hand at any time, the money being let 
out immediately with its coming in. 

All money is loaned, either by vote of the 
share-holders in meeting assembled, or by a large 
committee chosen by the share-holders. 

Checks are not valid unless they bear several 
signatures. 

The utmost caution is encouraged, and every 
[ 259 ] 



How to Save Money 

action is passed upon, leaving little opportunity 
for carelessness. 

A share in a well-organized cooperative bank 
offers very good security, whether or not the 
owner intends to borrow money of the bank 
for building purposes. The principal danger, 
and perhaps the only danger, lies in the pos- 
sible lack of judgment on the part of the 
officers and committees who invest the money. 
Should loans be made above the value of the 
property, a loss is likely to occur, and a con- 
tinuous lack of judgment is pretty sure to wreck 
the bank. 

Then, carelessness on the part of the local ad- 
viser or title-searcher may result in disaster. It 
is sometimes difficult to ascertain whether or not 
a title is good. An incompetent attorney may 
pass a weak title and pronounce it sound. But 
as its investigating and investing committees are 
large, and as all of the members are, or should 
be, familiar with the territory in which they live, 
and, further, as the bank is not likely to loan 
outside of its town or suburbs, there is ample 
opportunity for properly weighing values, and, 
consequently, less chance for the exercising of 
bad judgment. 

The strength of the bank is dependent upon 

[ 260 ] 



The Cooperative Bank 

the character of its members and the conserva- 
tism and judgment of its committees. 

I would not advise any one to have anything 
to do with a cooperative bank which is officered 
or managed by speculators and financial manip- 
ulators, or with any bank which is apparently 
under the control of one man or of any one set 
of men. 

If the bank is solid and well managed, its sound 
condition is known to the regular bankers and 
leading business men of the town. Unless these 
men will recommend the bank, keep away from it. 

It is obvious, of course, that no well-managed 
cooperative bank can pay more than current 
rates of interest. The bank making, apparently, 
more than a fair rate of interest is probably un- 
sound. The borrower, with good security, is 
never obliged to pay exceeding six per cent inter- 
est. If he pays more than that, he does it because 
the security he offers is not up to normal. 

The cooperative bank is especially recom- 
mended to those about to build, who would then 
have an opportunity of borrowing from a com- 
bination of which they are a part. 

If you are a member of a cooperative bank, 
attend all of its meetings, that you may keep 
track of what is being done. 

[261] 



How to jSave Money 

CHAPTER XXXI 

THE HOME BANK 

THE old-time children's custom of keeping, 
and of sometimes filling, a little tin or iron 
bank, with pennies or other coins, has, during the 
last few years, broadened itself out to include the 
older people. 

Hundreds and thousands of fathers and 
mothers, and young men and women, married and 
single, make it a point to deposit in one of these 
little home savings banks from a cent a day to a 
larger sum a week. Many make it their duty to 
drop into the bank all of the pennies they receive, 
or all of the five-cent pieces, or all of the ten-cent 
pieces. 

This custom is to be encouraged, even among 
the well-to-do, for it allows one, almost uncon- 
sciously, to accumulate small or greater sums of 
money, which may be used for a specific purpose, 
or placed in the savings bank, or otherwise put 
away, whenever the amount is large enough for 
deposit or investment. 

I would most emphatically advise the man of 
family, the wage-earner, and salary-receiver, to 
place on the dining-room shelf a tin or iron bank, 
[ 262 1 



The Home Bank 

and to make systematic visits to it; and, further, 
to have one for each of the children, and one for 
each of the grown-ups as well. Nothing con- 
tributes more to the principle of systematic sav- 
ing. Its whole influence is good. It is one of 
the foundation stones of success. 

But be systematic about it. 

Better deposit one cent a day every day, than 
five cents occasionally. 

Better put away every five-cent piece, and do 
it religiously, than to save only when the spirit 
moves. 

Establish a basis, whether it be one cent a day 
or a dollar a day, and when you have established 
it, stick to it, unless the unforeseen occurs. 



[ 263 



How to Save Money 

CHAPTER XXXII 

KEEPING ACCOUNTS 

EVERYBODY, in business or out of it, on 
the farm or in the store or office, in school 
as teacher or pupil, married or single, old or 
young, — if old enough to know the difference 
between subtraction and addition, — should keep 
some sort of a record of the money coming in and 
where it came from, and of the money going out 
and where it goes. 

There is every reason for this, and absolutely 
not even the slightest shadow of an excuse for 
not doing it. 

It is very necessary to know where money 
comes from and where it goes, whether one handles 
a few dollars a week, or a few million dollars a 
year. I am not asking the reader to take a course 
in bookkeeping, or even consider the art of 
double-entry. But what is known as "single en- 
try " is as simple as the multiplication table, for 
all one has to do is to enter what he receives, and 
what he pays out, and strike a balance, which 
cannot help showing him whether he is running 
ahead or running behind, and enables him to lo- 
[ 264 ] 



Keeping Accounts 

cate with exactness necessary expense and unnec- 
essary extravagance. 

In no other way can he be familiar with his 
own financial condition, or ascertain whether or 
not he is spending too much or too little in any 
direction. 

The mere keeping of accounts will not prevent 
extravagances, or careless expenditure, but it will 
locate the leaks, and this, by itself, works for 
economy. 

No elaborate books are necessary. One book 
will do. In the first part of it, enter all the 
money you receive. Simply write : 

1912 

Jan. 1, Salary $22.00 

Feb. 2, Interest from Blankville Savings 

Bank 19.40 

Beginning in the middle of the book enter each 
item of expense, as : 

1912 

Jan. 1, Rent $26.00 

Jan. 15, Groceries (Cobb & Cobb) . . . 3.68 

Jan. 31, Lunches for the month . . . . 6.25 

It is not necessary to enter every small expend- 
iture by itself. For instance, if it costs you ten 
[265 ] 



How to Save Money 

cents a day for carfare, make one entry for the 
month. And little things, like postage stamps 
and spent nickels, can be lumped together under 
" incidentals." But do not take too many liber- 
ties with incidentals. It is better to specify than 
to make blank entries, unless they are of very 
little significance. 

At the end of each month strike a balance, and 
at the end of each year make up a little table of 
averages, of loss or gain. In this table you will 
include what you have saved. 

If you are not a professional bookkeeper, and 
have never studied bookkeeping, I suggest that 
you ask some bookkeeper to give you a little as- 
sistance, to map out a sort of form for you to 
follow, so easy and so simple that you can readily 
fill it out. Do not let this bookkeeping friend 
work out for you any complicated scheme of 
keeping accounts. The simpler it is the better for 
you, provided it covers the ground. 

Accurate statistics are impossible, but I think 
that I may claim that one half of the men, and 
ninety per cent of the women, either keep no 
record of expenses, or keep one which is a little 
worse than none at all. These foolish people 
will, if questioned, present one or more of the 
convenient, standard, kiln-dried, and mildewed 
excuses. Most of them will say that they have 
r 266 1 



Keeping Accounts 

not the time. Ninety-nine per cent of those who 
use this excuse refuse to keep proper accounts 
from pure, unadulterated laziness, unwillingness 
to handle time as a commodity, and a lack of ap- 
preciation of established principles of economy. 

The only class of people who have plenty of 
time for everything are those who are extremely 
busy. If you want anything done, ask a busy 
man to do it for you, not the loafer. 

Another excuse, which is not quite so dry as 
the foregoing, is that one can tell what he has by 
counting what he has left over; that is to say, if 
his income is fifty dollars a month and he has 
eight dollars left over at the end of the month, 
his expenses have been forty-two dollars. This 
excuse is unworthy of any consideration, and 
laziness is back of it. It is important to know 
how much we have left over, but not more so 
than it is to know how it happens that we do not 
have more or less left over. 

Another prevalent and thoroughly idiotic 
excuse is used by the careless and lazy, who claim 
that knowing where money comes from and where 
it goes does no good, either in expenditure or in 
saving. The absurdity of this claim is too great 
for even passing comment. 

While there are hundreds of thousands of men 
and women who do not understand bookkeeping, 
[ 267 ] 



How to Save Money 

and who do not keep complete or even fair ac- 
counts, it is a fact that practically all systematic 
and successful savers, those who respect and 
recognize the responsibilities of the present and 
future, those who are wise enough and honest 
enough to protect themselves for the good of 
themselves and the community, keep some sort of 
account of income and outgo, and regulate their 
financial affairs with some degree of system. 

I do not mean to say that every spendthrift, 
and that all improvident and irresponsible people, 
do not keep a record of their financial affairs, but 
I never knew a spendthrift, or any other careless 
handler of money, who took any account of what 
came in and what went out. 

The keeping of accounts is absolutely necessary 
to the proper and economical management of 
financial affairs, and to systematic saving and 
accumulation. 



[ 268 ] 



Treating 



CHAPTER XXXIII 

TREATING 

I HAVE not considered treating under the 
chapter headed " Petty Extravagances." It 
has become so common, and has been responsible 
for so great a waste of money, that it should be 
discussed by itself. I am inclined to feel that 
treating has become epidemic, and that its prac- 
tice is increasing. 

There is a difference between the showing of 
necessary courtesy and the practice of indiscrim- 
inate courtesy, which is commonly called treating. 

Treating does not create or maintain friend- 
ship. Its effect, in the end, is likely to be 
diametrically opposed to friendship. When it 
goes beyond the courtesy line, it is clear and sheer 
foolishness, is without excuse, is saturated with 
extravagance, and is often criminally wrong. 

Hundreds and thousands of men could save 
considerable money if they gave up treating, not 
only their friends, but their acquaintances. 

In the first place, treating is an inexcusable 
and expensive habit. The treater almost inva- 
riably spends his money for things he does not 
need, and he is obliged to partake of those things 
[269] 



Hoiio to Save Moneij 

at his own expense every time that he treats 
another. 

Comparatively few men like to drink alone, and 
very few become intoxicated from the solitary 
bottle. Xinety per cent of intoxication and liquor 
drinking is done at the open bar, at the dining- 
table, or where men congregate ; and the man who 
would take but one drink, takes a dozen, because 
of the habit of treating. It is so with smoking, 
and with other habits, but it is largely confined 
to drinking. 

I do not propose to deliver a temperance lec- 
ture. It would be out of place in a book like this. 
But I am considering liquor drinking and treat- 
ing as prevalent and inexcusable extravagances. 

The habitual drinker or treater does not, and 
cannot, as a rule, provide for his future. 

Liquor drinking is the fore-runner of degrada- 
tion, and is an unrelenting enemy of every form 
of economy, and a most successful agent of 
extravagance. 

Alcohol has its place, but there is, from every 
standpoint, moral and material, no excuse for the 
habitual drinking of liquor as a beverage, and 
the drinker, and especially the treating drinker, 
cannot forge ahead, and he is not likely to be able 
to provide for the future. 

It is a fact that the higher grade of men are 
[ 270 j 



Treating 

the least addicted to treating. They may do it 
occasionally as a courtesy, and some of them may 
be moderate drinkers; but the rank and file of 
them pay their bills, earn the money which they 
spend, and spend it carefully, always with the 
exercise of good judgment. 

No one but the habitual treater has any respect 
for the habitual treater, and I do not think that 
even he has much of any for his kind. 

Friendship that comes from promiscuous treat- 
ing, from any kind of mental or physical debauch- 
ery, is the weakest sort of friendship, and is 
without staple foundation. 



[271] 



I 



Horc to Smje Money 

CHAPTER XXXIT 
THE SATE DEPOSIT BOX 
WOULD }.i~^^ -:--T :-e. --:--. 



1 V- - - «. -.4 



U.^i^ '„^^ 



I: : s p : I : - . : - . . 7 ::::p : ssftle to Imrg^aiiae tbe 

v=:!: ::z.-.}-.z.:z^z '-'-'.- i-z y- htassi fizst, be- 
c?-:5e :-f7 ^:i :: ^ir --- the greatest care. 
Srmlj. :t: v:5t rh^ \:i -su^Ev protected by 
c^7 ^:.d zlz':.'. ~3.::-:i:ii. t^^::::: : : : glar alaims, 
a."i ::gh:5, T-rLj. b.-_i^ r-:- :h3 hi^iest 
gTide c: r:::-5i-^: : -g:^: :- j:-:oly get 
into t fau B , mid .i : s r. : : likely to know the con- 
tats €f mj ciz ::i Hr nmst lireak into the 



tbdI: 5 . .- i 7 ^ s s r aftendsiitsy safety 



c-:i:ir :-:e::T:ri:r. and be 
box 5 ::- : 7 -z after all, be 
JQst ms fikdty to iorce a Tacaz: bos as ooe con- 



[«s] 



The Safe Deposit Box 

It would seem that there might be some danger, 
— that the attendant, knowing the renters, might 
get into the box; but, so far as I know, this has 
never occurred. In the first place, two keys are 
required, the attendant's key and the renter's 
key. The attendants are selected with every pre- 
caution, and it would be very difficult for any one 
of them to commit burglary without conniving 
with his associates. 

Boxes large enough to hold any reasonable 
amount of property can be rented for from three 
to ten dollars a year. If the wage-earner feels 
that he cannot afford the price of a box, and 
holds valuable papers, I would suggest that he 
wrap them up carefully, with his name and ad- 
dress in his own handwriting on the outside of 
the package, and ask a reliable banker to hold 
them for him. Of course, there is a little risk 
here, but not so great as there would be if the 
papers were left about the house. 



273 ] 



How to Save Money 

CHAPTER XXXV 

WHAT SOME TERMS STAND FOR 

yiBOVE Par, — Above par, or more than par 
■^^ value, usually applies to stocks and bonds 
which are quoted, sold, or valued at more than their 
face value. For example, if a stock, with a par 
or face value of a hundred dollars, is worth or is 
sold for more than a hundred dollars, such stock 
is said to be " Above Par." 

Assessment,— Holders of stock, other than 
non-assessable stock, can usually be called upon 
to pay an additional sum, after they have pur- 
chased the stock, and this is called an assessment. 
It is well to avoid purchasing stock that is not 
non-assessable. The certificates of non-assessable 
stock contain the word " Non-Assessable." 

Bear. — Those who operate for declining prices 
are called " Bears." " Bearing the market " 
means to attempt to force down the prices of 
stocks and other securities. 

Block. — This term is applied to a number of 
shares of stocks or bonds of the same kind and 
bought at the same time. 

Board. — A short designation for the stock ex- 
change, or stock board, or place where stocks and 
[274] 



What Some Terms Stand For 

bonds are sold, other than a banker's or broker's 
office. 

Bond. — A certificate running for a definite and 
specified period, which acts as a legal receipt for 
money borrowed by any government or corpora- 
tion, and upon which interest is payable at a 
specified rate at specified intervals. The bond 
may be secured by a mortgage or other lien upon 
the property. Bonds, as they run, offer better 
security than do stocks and usually pay a much 
lower rate of interest, which is fixed ; while stocks, 
other than preferred, do not guarantee any 
specified rate, and may pay up to several hun- 
dred per cent. But it should be borne in mind 
that any guarantee written upon the certificate 
is worthless if it represents property of little or 
no value. 

Break. — A quick and unexpected decline in the 
price of stocks or other securities. 

Broker. — One who makes it his business to buy 
or sell any form of securities, his remuneration 
coming from commissions. He is distinct from a 
banker, although one may be both a broker and 
a banker. Brokers who deal in stocks and bonds 
are sometimes called " stock brokers " or " bond 
brokers." 

Bull. — One who operates, or who attempts to 
operate, the stock market for advancing prices. 
[275] 



How to Save Money 

To " bull the market " means to attempt to force 
the prices above normal. 

Call-Loans. — Money loaned subject to demand; 
that is to say, the lender may demand his money 
without giving advance notice, although most 
call-loans are not considered payable in less than 
from one to three days. 

Capital, — The capital of a corporation is the 
fund which is used for the practice of its busi- 
ness, and includes all of its property, both real 
estate and all other assets. A company incorpo- 
rated for, say, a hundred thousand dollars, is 
supposed to have property or funds to that 
amount, occasionally more; but the majority of 
corporations, making much effort to sell their 
stocks, have very much less in real assets than 
the amount of their capital, many companies be- 
ing capitalized for a thousand times the value of 
what they are supposed to own. Under the loose 
laws of some of our States a corporation may be 
formed with an " expressed " capital of a hun- 
dred millions of dollars, and yet its assets and 
the actual extent of its propert}^ may be limited 
to a hole in the ground and a patented but useless 
pick. 

Capital Stock. — The sum fixed by the charter 
of a corporation as the amount paid in by the 
stockholders. In some States it must be paid in 
[ 276] 



What Some Terms Stand For 

cash, but in others it may be paid in Avoithless 
options or patents. 

Certified Check, — A check which has been pre- 
sented to the bank, but not cashed. Some officer 
of the bank, usually the cashier, stamps across it 
the word, " Certified," and below it writes his 
official signature. So far as the receiver of the 
check is concerned, this check is no longer a per- 
sonal one, but is in reality a certificate of deposit, 
the failure of the one drawing it in no way vi- 
tiating it; but the depositor, or one drawing the 
check, is liable should the bank fail, if he per- 
sonally presents the certified check in payment, 
while he is exempt from liability if the receiver 
of it has asked the bank to certify it. 

Chattel Mortgage. — ^A mortgage on personal 
property, such as furniture, horses, carriages, 
stock in trade, and almost everything else except 
real estate. 

Commercial Paper, — A term applied to notes 
given in business which are negotiable, that is, can 
be sold. 

Common Stock, — Stock which entitles one to 
equal dividends of the profits, if there be any, 
after the payment of dividends to the preferred 
stockholders. 

Corner. — The expression " cornering the mar- 
ket " applies to the condition of the stock market, 
[ 277 ] 



How to Save Money 

when certain stocks are purchased in sufficient 
quantities to allow the buyers of them to control 
the price. 

Coupons. — Detachable slips, which are a part 
of some bonds, on which one receives the interest 
due at specified times. They are to be cut off, 
and presented for payment on the dates printed 
upon them. 

Curb Market, — A place of trading in stocks 
and bonds, usually located upon the street (hence 
its name), in which are bought and sold stocks 
or other securities which are not recognized by 
the regular stock exchange or stock board. So- 
called " curb stocks " are likely to be of ques- 
tionable value, and are, at best, considered highly 
speculative. The small investor had better keep 
away from all stocks or other securities sold on 
the " curb." 

Debenture Bonds, — Bonds that have no mate- 
rial or tangible security back of them save that 
of good- will, good intentions, and reputation. 

Dividend, — That part of the profits which is 
divided among the stockholders. 

Fully-paid Stock. — The stock which has been 
paid for in cash or in property, or in some rec- 
ognized or legal equivalent, and is not, therefore, 
assessable. 

Future, — The buyer's right to demand deli- 
[ 278 ] 



What Some Terms Stand For 

very, and the seller's right to deliver, within a 
certain specified time. 

Lamb, — A term applied to inexperienced stock 
buyers and speculators. The word " fool " would 
be more appropriate. 

Listed Stocks and Bonds. — Securities that are 
recommended and sold by the regular stock ex- 
changes and stock boards, and are not subject to 
the usual fluctuations of purely speculative 
stocks ; but it must not be understood that the 
value of " listed stocks " is guaranteed. Thou- 
sands of men have been ruined by buying only 
what were supposed to be reliable stocks and 
bonds. 

Long, — One is called " long on the market " 
when he has bought stock with the expectation 
of an advance in price. 

Margin. — Stock is said to be purchased " on 
margin " when the customer pays down only a 
part of the price, the usual payment being ten 
per cent, which is supposed to cover any probable 
decline within the next few days. Ninety out of 
every hundred failures are due to buying stock 
" on margin." 

Mortgage. — A mortgage is practically a bill- 

of-sale, but the mortgagee cannot obtain the 

property until the expiration of the mortgage, 

provided the interest is paid regularly, nor can 

[ 279 ] 



How to Save Money 

he obtain it without a foreclosure, and the mort- 
gagor has a right to redeem his property at the 
expiration, if he pays the principal and interest. 

Mortgagee, — One who lends money on a mort- 
gage, who takes a mortgage as security. 

Mortgagor, — One who mortgages his prop- 
erty. 

Par, — The face or written value of anything, 
but Tisually applied to stocks and bonds. First- 
class stocks generally have a par value of one 
hundred dollars. 

Point. — Applies to one dollar a share. When 
stock advances ten points, for example, it is said 
to be worth ten dollars more than its former 
price. 

Pool, — Large quantities of any stock bought 
together for putting through some deal. 

Preferred Stock, — Stock which entitles the 
owner to dividends out of the net profits before 
anything is paid to the regular stockholders, 
that is, the holders of what is known as " common 
stock." Preferred stockholders have also the ad- 
vantage over the others should the company be 
dissolved. Preferred stock can never pay a di- 
vidend above that specified upon the face of the 
certificate, no matter how large the profits of 
the company may be. 

Private Corporations. — Business concerns do- 
[ 280] 



What Some Terms Stand For 

ing business with private capital and under pri- 
vate management, and not amenable to legislative 
control beyond the laws covering general corpo- 
rations. These companies include practically all 
business houses or combinations other than part- 
nerships. 

Public Corporations, — Municipal or State or- 
ganizations. 

Quasi-Public Corporations, — Those which op- 
erate under franchise, such as telephone, telegraph, 
railroad, gas, and water companies. Although 
they are private corporations they are somewhat 
under government control. 

Selling Short, — When one sells at a price with 
the expectation of buying a stock at a lower 
price and making delivery, he is said to be " sell- 
ing short." 

Share. — A stock certificate, or any other certif- 
icate, representing a part of the capital stock. 

Sinking Fund. — A definite sum of money set 
aside for a specific purpose. 

Syndicate, — A combination of men formed for 
the purpose of putting through ^ome business 
deal. 

Underwriting, — A banker, or group of bankers 
and manipulators, who purchase an entire bond 
issue at a specific price, with the expectation of 
retailing the bonds at a higher price. 
[281] 



How to Save Money 

Watered Stock, — When stock is issued in ex- 
cess of the tangible property, the security is said 
to be " watered." 

Working Capital, — That portion of the capital 
of the corporation, or other concern, used directly 
for the doing of its business. 

Treasury Stock. — That part of the capital 
stock which has not been sold, but has been held 
in the treasury of the company to be disposed of 
from time to time as the necessities of the busi- 
ness warrant, the proceeds of the sale to go into 
the business. 

THE END 



[282] 



INDEX 



Above par, ^74 
Accident insurance, 

Accounts, keeping, 264 
Advice, taking, 83 
Annuity, the, 244 
Assessment, 274 

Backing business, 247 
Bad investments, 185 
Bank account, keeping 

a, 252 
Bank stock, 127 
Bank, the cooperative, 

259 
Bank, the home, 262 
Bank, the loan and 

trust, 252 
Bank, the National, 252 
Bank, the savings, 99 
Bank, the State, 252 
Banks, business, 252 



Banks of deposit, 252 

Bear, 274 

Block, 274 

Board, 274 

Bond, 275 

Bonds, debenture, 278 

Bonds, listed, 279 

Bonds, State, municipal, 
and town, 118 

Bonds, United States, 
113 

Boxes, safe deposit, 
272 

Break, 275 

Broker, 275 

Bucket-shops, 137 

Bull, 275 

Business, backing, 247 

Business banks, 252 

Buying a home, 210 

Buying stocks on mar- 
gin, 146 



283] 



Index 



Caxl-loaxs, 276 

Candy, 68 

Capital, 276 

Capital stock, 276 

Car-riding, 68 

Certified check, 277 

Chances, taking specu- 
lative, 96 

Chattel mortgages, 183, 
277 

City bonds, 118 

Clothes, 68, 79 

Commercial paper, 277 

Common stock, 277 

Cooperative banks, 259 

Comer, 277 

Corporations, private, 
280 

Corporations, public, 
281 

Corporations, quasi- 
public, 281 

Coupons, 278 

Curb market, 278 

DANGEKOrS INVEST- 

MENTS, 185 

Debenture bonds, 278 



Debt, 146 
Deposit banks, 252 
Deposit boxes, 272 
Dining out, QS 
Dividend, 278 
Dress, 68, 79 
Drinking, 269 

Expenses, fixed, 37 
Extravagance, 53 
Extravagances, petty, 
68 

Fake investments, 

185 
Fire insurance, 238 
Fixed expenses, 37 
Friends, loaning to, 90 
FuUy paid stock, 278 
Future, 278 

Gambling in stocks, 

137 
Government bonds, city, 

118 
Government bonds. 

State, 118 
Government bonds, 

town, 118 



[284 



Indeos 



Government bonds, Life insurance, 224 



United States, 113 
Gum chewing, 68 

Home banks, 262 
Home, buying a, 210 
How much to save, 39 

Improvident, the, 19 
Indebtedness, 146 
Industrial stocks, 155 
Institutions for saving, 

99 
Insurance, accident, 242 
Insurance, annuity, 

210 
Insurance, fire, 238 
Insurance, life, 224 
Investments, fake, 185 
Investment value of 

stocks, 131 

Jeweley, 68 

Keeping a bank ac- 
count, 252 
Keeping accounts, 264 



Listed stocks and bonds, 



Lamb, 279 



Liquor habit, the, 269 

Living beyond our 
means, 29 

Loan and trust com- 
panies, 252 

Loaning to friends, 90 

Long, 279 

Making a show, 68 

Margin, 279 

Margin, buying stocks 

on, 146 
Market, curb, 278 
Market terms, 274 
Marriage, saving for, 

39 
Materialistic, the, 13 
Means, living beyond 

our, 29 
Mortgage, 168, 279 
Mortgagee, 280 
Mortgages, chattel, 183, 

277 
Mortgages, real estate, 

168 



285] 



Index 



Mortgaging a home, 
210 

Mortgagor, 280 
Municipal bonds, 118 

Natioxai. banks, 252 

oveii-dezssixg, 79 
O^wning a home, 210 

PaPEB, C0M3IEECIAL, 

277 
Par, 280 

Petty extravagances, 
68 

Pomt, 280 

Pool, 280 

Preferred stock, 280 

Private corporations, 
280 

Provident and improv- 
ident, the, 19 

PubHc corporations, 
281 

QUASI-PrBUC COEPOEA- 

Tioxs, 281 

Real estate butts'g, 
210 



Real estate mortgages, 

168 
Running into debt, 146 

Safe deposit boxes, 

272 
Saver, the, 19 
Saving, 39 
Savings banks, 99 
Second mortgages, 168 
Selling short, 281 
Share, 281 
Shaving, 68 
Shoe-shining, 68 
Short, 281 
Show, 68 

Sinking fund, 281 
Smoking, 68 
Soda water habit, 68 
Speculation, 96, 137 
Speculative chances, 

taking, 96 
Speculating in stocks, 

137 
Spendthrift, the, 19-29 
State banks, 252 
State bonds, 118 
Stock, bank, 127 



[286 



Indeoo 



Stock, common, 277 
Stock, fully paid, 278 
Stock, preferred, 280 
Stock, treasury, 281 
Stocks, buying on mar- 
gin, 146 
Stocks, industrial, 155 
Stocks, investment val- 
ue of, 131 
Stocks, listed, 279 
Stocks, speculating in, 

137 
Suppers, 68 
Syndicate, 281 



Theatre, the, 68 
Third mortgages, 168 
Tips, 137 
Town bonds, 118 
Treasury stock, 281 
Treating, 269 
Trousseau, 78 
Trust companies, 253 

Underwriting, 282 
United States Govern- 
ment bonds, 113 

Value of stocks, 131 



Taking advice, 83 
Taking speculative 

chances, 96 
Technical terms, 274 
Terms, 274 



Watered stock. 
What some terms stand 

for, 274 
Working capital, 282 



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